The National Federation of Independent
Business (NFIB) Research Center recently released results of an
industry-specific survey regarding the small business economy. It looked at the
construction, manufacturing, retail and service industries.
Holly Wade, NFIB director of Research &
Policy Analysis, commented, “Small businesses are working hard to stay open
while they continue to navigate the coronavirus pandemic. This report shows that
some industries are recovering faster than others, but there is still much work
to be done.”
Among the key findings for the construction
industry are that optimism was up 9.1 points based on the NFIB’s Optimism Index,
compared to April, and 1.8 points higher than the overall Index of all firms.
According to the NFIB, demand for new construction remained high, and the
industry has a “better than average” outlook compared to the rest of
the small business economy. Demand for new workers has been high, with higher
than average job openings and increasing employment plans. According to the
survey, a net 24 percent of companies intend to increase their workforce in the
next three months.
For the manufacturing industry, the Optimism
Index saw a 13.1 point increase, with earning trends over the last quarter weaker
compared to other industries.
Supply chain disruptions and business closures
in the early months of the pandemic are cited as major components of what has
hit the manufacturing industry hard. A net 46 percent of firms had lower
earnings. Still, future sales expectations saw a 64-point increase. The NFIB
indicates that sales growth will be the “key driver” of earnings
changes, noting that manufacturing firm owners expect significant recovery from
record lows earlier in the year.
The Optimism Index for the retail industry was
10 points better than the previous quarter and, according to the NFIB, closely reflects
the overall economy. Ten percent of retailers surveyed reported that inventory
levels were too low. That compares to just one percent of all small firms. The
report suggests retailers will increase inventories more than the average, with
13 percent planning to increase levels.
Finally, the Optimism Index for the services
industry was lower than the rest as this industry has struggled more than
others with recovery. Still, the survey found that owners were more optimistic
about economic trends. An increasing percentage of service firms plan to hire.
The industry reported a 46-percent increase in firms expecting higher sales.
In a separate survey reported in August, the
NFIB found that one in five small business owners believe they will have to
shut their doors if economic conditions do not improve over the next six
months. At the time, while most businesses had already used their Paycheck
Protection Program (PPP) loans to their full extent, 44 percent of owners said
they would apply or re-apply for a second loan if eligible.