While optimism among small U.S. businesses perked up slightly in September, owners saw little to celebrate as they planned to cut inventories and trim their workforce, a survey released on Tuesday showed.
The National Federation of Independent Business said its small businessindex for last month rose 0.2 point to 88.8 and was 7.8 points higher than the survey's second-lowest reading reached in March.
The good news is the index didn't decline, said William Dunkelberg, chief economist for the group. The bad news is that improvements were far less than what we hoped for.
The job generating machine is still in reverse, said Dunkelberg. Sales are not picking up, so survival requires continuous attention to costs, and labor costs loom large.
More firms plan more inventory reductions than plan to invest, and more owners plan to trim their workforce than plan to increase employment, NFIB said.
Credit markets are expected to remain difficult for those wanting to borrow, but with inventory investment and capital spending plans near historic lows, it is clear that loan demand -- not the supply of credit -- is weak, the trade group said.
There is not a lot of optimism about the economy, which is one reason why hiring and spending plans remain depressed, Dunkelberg said.
Only 7 percent think the current period is a good time to expand, the group said.
Although third-quarter real GDP growth will likely be over 3 percent, the surge hasn't shown up on Main Street as yet, Dunkelberg said.
Of the small business owners polled, 32 percent said their biggest problem was a dearth of customers.