While much of the economic data thus far for October has been weaker than expected, at least sentiment on the part of small businesses is improving. According to this month’s NFIB Small Business Sentiment survey, overall sentiment improved from 94.1 up to 94.9 and came in ahead of the 94.1 consensus estimate. Even after this month’s increase, overall sentiment on the part of small businesses remains below its average level of 96.0 since 2000, and nowhere near the current cycle’s high of 100.3 seen at the end of December 2014.
The table to the right breaks down the issues that small businesses are currently citing as the biggest problems they face. At the top of this month’s list are Government Red Tape and Taxes, which were each cited by 21% of the business surveyed. Next on the list was Quality of Labor (15%) and then Poor Sales (11%), both of which were cited by fewer businesses than they were last month. Given the election this month and the fact that most political ads are focused on what is wrong with Washington, it is not a surprise that issues with government regulation are at the forefront of business owners’ minds, but it is clearly having an impact. As noted in this month’s report, “Of those who think the current period is a bad time to expand substantially (56 percent), a record high 39 percent blame the political climate, second only to economic conditions.”