Small businesses are feeling good about the economy and about their personal futures. According to the latest CNBC Small Business Survey, the small confidence index reading has climbed to 59 from its 58 rating in the first quarter of 2019. This means small business owners are optimistic about the direction of their business for the next 12 months.
“Businesses are feeling pretty good, the economy is doing well, and confidence is still at high levels,” said Todd McCracken, the CEO and president of the National Small Business Association.
The survey shows that 60% of respondents expect revenue to increase in the next year. The percentage of small business owners who say they expect their revenue to decline (6%) is the lowest percentage since Q1 2018. What’s more, the percentage of business owners who say their business conditions are declining (5%) is also one of the lowest percentages in the survey’s history.
Larger-sized businesses with 50 or more employees are feeling especially optimistic. Up to 77% of these respondents said that business conditions were good and only 1% said their conditions were on the decline.
The highest small business confidence index rating was 62 and was recorded both in the first quarter of 2018 and the third quarter of 2018.
Experts suggest the reason for small business owners’ confidence is because the stock market has been riding high for the most part of 2019. The survey was also conducted just before the latest headlines were printed about the trade battle with China.
Waning benefits from the 2017 tax cuts and competition for employees in lieu of the low unemployment rate are also potential factors that are weighing in on small business owners’ economic outlook.
The unemployment rate fell to 3.6% in April, marking the lowest unemployment rate since 1969. The official unemployment rate has also been either at or below 4% for the past year.
Hiring was especially strong across in the business services sector where 76,000 jobs were added. This may not be surprising considering 11 million meetings take place in the U.S. per day and 61.2% of organizers plan corporate events. But it’s still a significant number.
Hiring was also strong in the construction sector where 33,000 jobs were added, and the health care sector where 27,000 jobs were added. The federal government also added up to 12,500 jobs in April 2019 alone.
The labor market has the biggest influence on the smallest businesses. Up to 63% of surveyed small business owners said they don’t expect their full-time staff to increase or decrease.
“The unique problems small businesses face are greater. Large companies have [a greater] ability to survey the marketplace and find people, but small businesses have an information gap in terms of finding employees and employees finding them,” said McCracken.
“A lot of small companies have to train their workers which is a big investment,” McCracken said. “If they leave in a year or six months, businesses don’t get that repaid.”