Small Business Optimism Hits Record High
Are you having a good day? If so, you’re in good company, as small business sentiment has reached a new high driven by the strongest local economic outlook on record, a “firmer hiring environment” and a stronger backdrop for investment according to MetLife and the U.S. Chamber of Commerce.
According to the report, two out of every three small business owners are optimistic about their company and the small business environment in the United States—a metric that’s widely used as a predictor for increased business expansion and investment.
Small business sentiment rose for the fifth consecutive quarter with a majority (62 percent) of small businesses expecting higher earnings and an increase in revenue one year from now. The increase was up one percentage point from last quarter. In Q2 2018, 18 percent of small businesses reported increasing staff over the past year, compared to 16 percent last quarter and 15 percent this time last year. Cash flow considerations have remained stable and strong, with more than three-quarters of small business owners (79 percent) feeling comfortable.
“It’s important to continue to break down barriers to growth and create an environment where all businesses can thrive,” said Suzanne Clark, senior executive vice president of the U.S. Chamber of Commerce. “Small business owners remain optimistic and by taking action to help alleviate some of their current obstacles and ensure opportunity, we will in turn further increase Main Street optimism.”
While small business owners are optimistic overall, there are some differences between male and female small business owners on some of the index indicators. The majority (64 percent) of male-owned businesses report good overall health, versus 51 percent of female-owned ones. Male business owners are also more confident when it comes to cash flow and their national economic outlook. Seventy percent of women-owned small businesses report being comfortable with their current cash flow, compared to 83 percent of male-owned small businesses.
Conversely, women reported higher optimism than men in other indicators. Female-led small businesses are more optimistic about the year ahead than their male counterparts with 65 percent of woman-owned small businesses expecting higher revenue in the next 12 months compared to 61 percent of male-owned small businesses. Women also anticipate more hiring growth (36 percent) compared to men (30 percent) and a greater increase in investment (30 percent to 28 percent, respectively).
“Our quarterly Small Business Index is all about tracking the sentiment of small business owners as well as discovering the challenges they face,” said Jessica Moser, senior vice president, Small Business Solutions in MetLife’s Group Benefits business. “With 60 million Americans working for small businesses across the country, we need to focus on solutions to support their growth and success.”
Overall, small business sentiment rose across all regions. The local economy continues to be the primary driver for the experiences of small businesses with 48 percent noting their local economic health as good, tied for the strongest mark since the Index began. As the U.S. economy continues its steady progress, the local business outlook appears to be strengthening with the Midwest and Northeast regions feeling the most buoyant about their prospects.
Southern small business owners’ confidence has softened from Q1 (19 points to 43 percent), but was still up from last year.