WASHINGTON (7/15/15)--The National Federation of Independent Businesses said that its small business optimism index slipped by 4.2 points in June, driven by pessimism over future sales (Economy.com July 14).

“Earnings have deteriorated amid weaker sales and increased costs, leading a net 4% to say that they plan to draw down inventories over the next several months, an 8-percentage point drop from the month before,” said Nate Kelley, Moody’s analyst (Economy.com). “Worse, only 23% have a capital expenditure panned during the next six months, the smallest share since September.”

While a net 17% of small businesses recorded thinner earnings in the last quarter, a 10% drop on a month-over-month basis, roughly 54% of respondents said now was not a good time to expand their business--largely because of current economic conditions.

On the other hand, only 9% said they believe the economy will deteriorate over the next six months, a 6% drop from May.

Additional numbers from the report:

• Price pressures remain tepid, as only 5% hiked average prices over the past few months, a historically weak reading, according to Moody’s;
   
• A net 2% said they had reduced staffing levels over the prior three months after a net 2% said they had increased staffing levels over that stretch in May; and
   
• A net 21% said they have increased compensation for employees over the past three months, down from 25%, while a net 11% said they plan to offer workers more over the next six months, down 14% on a monthly basis and the smallest share since January 2014.

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