Wall Street Journal/Vistage Small Business CEO Survey: Economic confidence steady

Economic optimism continues to hold strong among small business CEOs, according to the latest edition of the Wall Street Journal/Small Business CEO Survey.

The October 2017 survey, which had 781 respondents, measured the Small Business CEO Confidence Index at 110.0, which is consistent with the favorable levels recorded in the last six months. Since May 2017, the index has ranged between 109.3 and 113.6, averaging 110.7 over that time period.

Dr. Richard Curtin of the University of Michigan, who analyzed the survey results, suggested that this track record of optimism is due to “an underlying strength in the economy. Moderate, overall gains in the economy are likely to have contributed to the continuing confidence in small firms.”

Other key findings from the survey include the following.

CEOs expect slower economic growth

While about half of small business CEOs said that they believed the U.S. economy has recently improved, future prospects are less optimistic.

Only 34% of CEOs said that they expected economic conditions to improve during the next 12 months, which is similar to the response recorded in September (31%) but significantly below the 60% recorded in January.

“While this falloff in favorable prospects partly reflects the lack of progress on Trump’s policy agenda,” said Dr. Curtin, “the small October rise may be due to the expectation of a modest rebound in late 2017 and early 2018, due in part to hurricane recovery spending. Surprising is that the expectation of only modest economic growth has maintained the high plateau of the Confidence Index since the start of the year.”

Small firms expect rising revenues and profits

In October, about three quarters of small businesses (76%) said they expected higher revenues in the next 12 months, compared to 77% one month ago and 69% one year ago. Similarly, 61% of small firms said they anticipated profits to rise—a figure that’s unchanged from last month but higher than one year ago (55%).

“CEOs of small firms expect to flourish, even with modest economic growth without a downturn,” commented Dr. Curtin.

CEOs plan for more investments and hiring

Employment and investment plans among small firms have remained strong and mostly unchanged since the start of the year.

In October, 62% of small firms indicated that they planned to hire more employees, and only 3% of firms said they planned to decrease the size of their workforce. Meanwhile, nearly half (48%) of firms said they planned to increase their investment expenditures.

This is on par with the 2017 average, but notably higher than one year ago (37%).

Read the full report.

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