(INDIANAPOLIS) – The NFIB Small Business Optimism Index fell 8.1 points in March to 96.4, the largest monthly decline in the survey’s history. Nine of the 10 Index components declined, which is evidence that economic disruptions are escalating on Main Street as small businesses struggle to keep their doors open. The small business sector is anticipating and bracing for continued economic disruptions going forward.
“We have all been feeling the strain for the past few weeks, and now we have the data to document what is happening to small business. The optimism index tanked in one month, the largest monthly decline in the survey’s history. Small businesses desperately need access to the funds they were promised in the CARE Act,” said NFIB State Director in Indiana, Barbara Quandt.
In Rushville, Stephen Cull is extremely worried. He’s trying to figure out the best way to restructure his debt. He started his small business, Value Vending, several decades ago and now employs his wife and daughter, who help him stock vending machines in the area. The past few weeks have been rough for his family owned business. He’s seen a 50% dip in business. While some of his customers, such as hospitals, with proper protection are allowing him to come in and stock product, other customers, such as a private seed company, have told him to stay away. He expects the situation to get even more dire next week.
“I never thought we would be in a position where we couldn’t do business. I didn’t see this coming in a million years. I have never wanted or needed any help. I’m an independent person and even though I can file for unemployment I won’t,” said Cull.
Meanwhile, his daughter’s other small business, Bar Maids, has come to a complete halt. The business, which provides professional bar services for events like wedding and corporate meetings, has no clients.
“It’s been rough. Every day is a new challenge. Thank goodness we’ve kept our clients diverse and that some are still letting us in. I know we’re going to make it through this crisis I just have to figure out how,” said Cull.
The financial markets saw substantial change in March, with the stock market indices losing 22% of their value and jobless claims rising to a record 10 million in the last two weeks of the month. The NFIB survey collected the majority of responses in the first half of the month, so the sharp decline in employment is not reflected in the March survey data.
The main takeaways from the March survey include:
- The NFIB Uncertainty Index rose 12 points in March to 92, the highest level since March 2017.
- Reports of better business conditions in the next six months declined 17 points to a net 5%, which is the largest monthly decline since November 2012.
- Real sales expectations in the next six months declined 31 points to a net negative 12%, the largest monthly decline in the survey’s history.
- Thirteen percent of firms thought it was a good time to expand, a decline of 13 points from last month.
- Job openings fell three points to 35%.
As reported in NFIB’s monthly jobs report, prior to the COVID-19 outbreak, the small business labor market reported strong hiring, elevated levels of open positions, and historically high employee compensation. However, hiring plans experienced a significant drop from February yet finding qualified workers remains the top issue for 24% of small employers who reported this as their No. 1 problem.
Down two points from February, 60% of owners reported capital outlays. Of those making expenditures, 43% reported spending on new equipment, 26% acquired vehicles, 16% improved or expanded facilities, 6% acquired new buildings or land for expansion, and 12% spend money for new fixtures and furniture. Twenty-one percent of owners are planning capital outlays in the next few months, a sign that small business owners are scaling back spending as economic conditions started to disrupt the nation.
Sales held strong in March, with a seasonally adjusted net 8% of all owners reporting higher nominal sales in the past three months. As actual sales volumes remained strong, expectations of the future of sales growth deteriorated significantly. It is clear owners felt the pending economic shift as state officials began to shut down non-essential businesses and issue stay-at-home orders in response to coronavirus.
A net negative three percent of owners are planning to expand inventory holdings. Small business owners are bracing themselves for a significant reduction in consumer spending and future orders.
The frequency of reports of positive profit trends fell two points to a net negative 6% reporting quarter-on-quarter profits. Among the owners reporting weaker profits, 32% blamed weaker sales, 26% blamed usual seasonal change, 9% cited price changes, 7% cited labor costs, and 7% cited material costs. For those reporting higher profits, 53% credited sales volumes and 22% credited usual seasonal change.
NFIB released surveys in March on how COVID-19 is impacting small businesses. The latest survey showed 92% of small employers are negatively impacted by the outbreak and about half of small employers said they can survive for no more than two months under the current business conditions.