U.S. small business optimism fell in October, as business owners worried about the economy's outlook and scaled back on hiring plans amid a partial government shutdown.
The National Federation of Independent Business said Tuesday that its Small Business Optimism Index fell 2.3 points to 91.6 for October from 93.9 from September. "Since the Washington paralysis could hardly be good news, it would be expected that the optimism measures would deteriorate, and they did," Bill Dunkelberg, NFIB's chief economist, said in a prepared statement.
The index offers one of the first readings of how the 16-day temporary government shutdown in October affected Main Street. Turns out many small-business owners, even those with no direct exposure to government contracts, still felt a ripple effect as many consumers broadly pulled back amid the uncertainty.
But Bennett Grove, a small-business owner based in Indianapolis, doesn't need data to verify what he's been experiencing for months.
As Day One of the shutdown began Oct. 1, the phones at his two businesses—Junk Dawgs and Moving Dawgs—started to ring less. "Furlough, government shutdown. There's so much uncertainty wrapped up in that language," Grove said.
When consumers worry, they scale back on hiring service companies including professionals to haul away and move stuff. "They'd rather do it themselves," he said.
"When you watch the news, nothing has been resolved," Grove added. "There's still a little bit of uneasiness, uncertainty going into winter," he said.
In fact, many smaller merchants don't expect business conditions to improve—as the new budget deadline of Jan.15, 2014, approaches. The net percent of owners expecting better business conditions in six months was a net negative 17 percent, 7 points worse than September and 15 points worse than August, according to the NFIB.