The sixteen day government shutdown in October may not have affected non-farm payrolls, but it did damage the outlook of the small business owners who create most of the new jobs.
U.S. small business optimism slid to a seven month low as plans for new employees and capital spending were scaled back and business conditions and sales expectations worsened.
The Small Business Optimist Index from the National Federation of Independent Businesses (NFIB) dropped 2.3 points to 91.6 from 93.9 in September. It was the largest one month decline since last November when the index plunged 5.6 points to 87.5.Economists were looking for a small drop to 93.5.
"Since the Washington paralysis could hardly be good news, it would be expected that the optimism measures would deteriorate, and they did," said Bill Dunkelberg, NFIB's chief economist, in the accompanying statement.
Most of the component indexes were lower: the index of capital spending plans fell to 23.0 from 25.0; hiring plans skidded to 5.0 from 9.0; sales expectations plunged to 2.0 from 8.0; profits remained steady at 23.0 and inventory accumulation rose to -1.0 from -2.0.
Small business owners view the future with far more misgiving than they did in the summer before the budget and debt limit disputes roiled Washington. The outlook for business conditions in six months, past the next budget and debt limit deadlines in January and February, took a seven point hit, dropping to 10.0 in October from 17.0 in September and down from -2.0 in August.
The five years since the financial crash in the fall of 2008 have been the worst period for small businesses in the history of the NFIB survey which goes back to 1974.
Through the last half decade the highest the optimism index reached was 94.5 and it averaged 90.3. In the 20 years prior to 2008 the index registered below 95 in just 13 of those 240 months, 5.4 percent of the time. It averaged 99.9 a month throughout those two decades.
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