The recently-released MetLife & U.S. Chamber of Commerce Small Business Index showed that most small business owners still have a positive outlook on the economy. However, that majority shrank from the end of last year to the start of 2019. Only 53% of small business owners now say the national economy is heading in the right direction, while the same narrow majority said the same about their local economy.
But dig a little below the headlines, and there are some particularly bright sports in the data – and a more nuanced story. Here are some of the highlights from this quarter:
Young and minority business owners drive hiring plans
According to the survey, only 29% of small businesses report plans to increase staff this quarter. Coming in well above that score were small firms owned by veterans, minorities and younger people:
The plans to increase headcount are being primarily driven by larger small businesses (44%) and veteran-owned (44%), minority-owned (42%) and millennial- or Gen X-owned (39%) businesses.
In the U.S., younger generations are increasingly diverse. Thus, it’s important to note there’s some likely overlap between businesses owned by young people and those owned by minorities. Hiring intentions will be an interesting trend to watch moving forward, especially since the millennial generation is (right about now) replacing Baby Boomers as the largest generation.
Millennials’ influence and economic impact will only grow – and hopefully, so will hiring. Our economy could certainly use it after a modest dip in the jobs report for February.
Minority-owned businesses lead way on investment
Also this quarter, slightly fewer small businesses (27%) reported plans to increase investment, down from (29%) last quarter. Here again, minority-owned businesses were more likely to report plans to boost investment than the average small business:
Thirty nine percent of minority-owned businesses are planning to invest more in 2019, compared to 25% of non-minority-owned businesses. (This gap has widened from Q4, when there was a nine percentage point difference between the two).
The Northeast turns pessimistic on the local economy
Something happened last quarter in the Northeast, as small business owners in that region turned negative on their local economy – in a big way.
Just 38% of small businesses in the Northeast say their local economy is in good health, down 10 percentage points from Q4 of 2018.
According to survey results, other regions saw smaller or no change in their perception of their local economy. In the South, small business owners said their view of the local economy dipped from 64% to 60%, only a four point drop. And in the West views of the local economic outlook were unchanged.
These regional swings will be important to watch in the quarters ahead.
Retailers stay glum
One persistent trend that continued this quarter? The relative pessimism of small retailers. Compared to other sectors, small business owners in the retail industry are consistently more pessimistic:
By sector, retailers continue to be less optimistic, a trend observed throughout 2018.
If there’s a bright spot for small retailers, it was on the hiring front, where the number of owners planning to increase staff jumped this quarter from 29% to 36%. Should retailers continue to view the economy unfavorably, it will be interesting to watch whether those concerns eventually temper their staff growth plans.
That’s about a wrap for the first quarter. Preparations are under way for the next Index now and the survey will begin in April. Among the lingering questions this new data might help answer:
- Will young and minority small business owners continue to drive hiring?
- Will small business owners in the Northeast shake off their gloom?
- And will some of the decline in expectations about the economy prove to be a blip?
Stay tuned! Things are about to get interesting.
To download the full Q1 Small Business Index and dig even deeper into the findings, visit SBIndex.us. Plus, stay tuned, the next Small Business Index drops in early June.