The percentage of small business owners optimistic about the national economy jumped eight percentage points in the third quarter — 41%, up from 33% last quarter.
That optimism enabled the third quarter MetLife & U.S. Chamber of Commerce Small Business Index (Index), released today, to record an overall score of 62.3, up 1.7 points from the Q2 score of 60.6.
. Based on telephone interviews with 1,000 small business owners and operators, the survey also found that almost two-thirds of respondents rated the overall health of their small business as good, which is consistent with last quarter.
A majority (56%) of small businesses expect revenue to increase in the year ahead and 81% are comfortable with their current cash flow situation. This positive news comes despite the majority of respondents reporting slightly more guarded expectations about hiring and investment compared to the second quarter of 2017. The Q3 Index found that 24% of small business owners plan to increase staff, down from 29% in Q2.
“Small businesses are important to our local communities and the national economy. Their increased optimism this quarter reflects the trends of the broader business environment,” said James W. Reid, executive vice president for Regional & Small Business Solutions at MetLife. “The Small Business Index helps us better understand this important sector, so we can work on solutions by tackling the challenges small business owners face every day.”
Small Business Owners Split on if Job Candidates Are Prepared for the Workforce
In a spotlight question addressing workforce challenges, half of small business owners (50%) believe job candidates are not prepared for today’s job opportunities. Small businesses with a negative impression of job candidates are 25% less likely to increase staff over the next 12 months.
Respondents noted that the skills needed for the jobs available are not being taught – commonly referred to as the skills gap. In Q2, the Index found that only approximately two in five small business owners rated the quality of potential hires as good.
“Small business owners need a qualified workforce to unlock the full potential of their sector,” said Suzanne Clark, senior executive vice president at the U.S. Chamber of Commerce. “Insights uncovered in this quarter’s Small Business Index reinforce the importance of the business community and our education leaders collaborating on effective ways to close the skills gap. It’s a must to produce a workforce that in turn will power a stronger economy.”
Positive Outlook for Company and Operating Environment
The Q3 Index produced an overall score of 62.3, up 1.7 points from the Q2 score of 60.6 (on a scale of 0 to 100), which indicates that 62.3 percent of small business owners currently have a positive outlook for their company and the environment in which they operate.
This improvement stems from small business owners’ perceptions of the economy, paired with confidence in the health of their businesses. The Index score takes into account small business owners’ responses to 10 questions spanning three topics: the current health of their business; their views on the economy and other external forces that impact their company; and their plans and expectations for the near future.