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.
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