WASHINGTON - Small business optimism soured in August, falling to its lowest in more than three years as proprietors expect the U.S. economy to continue slowing, a survey released on Tuesday showed.
The National Federation of Independent Business said its index of small business optimism fell 2.2 points in August to 95.9, the lowest since March 2003 when the economy was stuck in a sluggish recovery from the 2001 recession and business spirits were dampened by the U.S. invasion of Iraq.
"The August survey signals a slowdown in the works," William Dunkelberg, NFIB chief economist said in a statement, "Should August levels of optimism prevail, we could see growth slow to the low 2 percent range in the first quarter of 2007."
The percentage of businesses that reported regular borrowing jumped 8 percentage points to 46 percent in August to a level not reached since the survey began in 1986.
"Credit has become more expensive," Dunkelberg said. "It's significant that more owners want it and a higher percentage of owners are having a tougher time getting it,"
The housing slowdown created cash flow problems for owners, NFIB said, adding the net percent of owners reporting loans harder to get in recent months rose a point to a net 8 percent, the highest since 2000.
Source: National Federation of Independent Business