Survey: Small-business optimism takes a hit over fears of an economic slowdown

Although tax cuts and regulatory rollbacks this year fueled small-business optimism to hit its highest level in decades, the latest CNBC|SurveyMonkey Small Business Survey, released Dec. 10, reveals that small-business confidence is starting to dim.

After hitting a record high in Q3, the Small Business Confidence index declined from 62 to 59 in the fourth quarter, led by small moves lower in components across the board. This new data from CNBC and SurveyMonkey underscores the idea that while sentiment is at or near record highs, challenges still remain for Main Street.

The dip comes at a time when the markets are punctuated by bouts of volatility and economic concerns loom over trade tensions and the shortage of skilled workers. The data supports other small declines in metrics, from NFIB’s monthly read on small-business sentiment in September and October, as well as trends around hiring and labor from Bank of America and Wells Fargo.

For the first time in six quarters, sentiment around business conditions also has taken a slight dip, from 58% in Q3 to 55% in Q4, although that read is still up 11 percentage points year-over-year, according to the survey.

Just 34% of small-business owners now say that tax-policy changes will have a positive effect for them in the next 12 months, down from a high of 46% kicking off the year, indicating some of the positive sentiment surrounding the law may have waned.

More small-business owners are questioning the positives the administration’s trade policies will have on their bottom lines. 16% of small-business owners say they expect changes in trade policy will have a positive effect on their businesses in the next 12 months, a new low for the survey. In addition, 1 in 5 business owners surveyed do business with China, and they were nearly twice as likely as others to expect a negative impact on their business.

On the job market, 18% of business owners said they had roles open for at least three months, an increase of 2% from Q3 of this year. To help bridge that gap, 56% said they were offering higher wages, 31% said they were offering to pay for additional training and 27% said they were offering additional benefits to workers. Others said they were offering to help pay for student loans and even relaxing policies around things like drug testing and criminal records.

Finding skilled labor has also come up as a top issue in the NFIB’s monthly survey, outpacing other major issues, like taxes and government red tape and regulations for more than half of the year in 2018, a trend that could continue into the next year.

With midterms complete, Main Street is weighing in on its top priorities for Congress in 2019. Leading the way: spending cuts and deficit reduction (19%), followed by immigration (18%) and health care (17%).