As the broad U.S. economy finished 2015 with a big round of job creation, more pockets of Main Street are feeling optimistic about near-term prospects and planning to add new positions.
According to a recent index from the National Federation of Independent Business, plans to create new jobs posted a 4 point gain and reflected optimism about sales. Meanwhile, the overall monthly optimism index for December, released Tuesday, added a modest 0.4 point in December — essentially flat — and stands at 95.2. That's well below the 42-year average of 98.
Job creation plans were especially strong in manufacturing, according to the report, a sector that has been slowing.
There was "a seasonally adjusted net 15 percent plan to create new jobs, up 4 points, a nice gain, possibly driven by the surge in expected real sales gains," said the NFIB's chief economist, Bill Dunkelberg, in a prepared statement.
Capital spending among small businesses also grew stronger in November and December, reflecting increasing certainty. "The percent of owners planning capital outlays in the next three to six months rose 1 point to 26 percent, not a strong reading historically but among the best in this expansion," Dunkelberg said.
Job creation plans among smaller employers reflect robust hiring trends in the larger economy. The Labor Department on Friday said nonfarm payrolls grew 292,000 during December, and the unemployment rate was 5 percent.
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Looking ahead, the larger question is whether overall growth and hiring will advance further, or whether turmoil in China will weigh down the U.S. economy and investors.
"It's a tale of two cities," said Jeff Stibel, vice chairman of Dun & Bradstreet, which along with Pepperdine University releases a quarterly reading on small- and medium-sized companies. "In the U.S. economy, business growth and the local economy are extremely strong," he said. "But the noise globally and in China is giving people enough uncertainty to create some pause and fear."
And for many smaller employers, it's this perception about future business prospects and stability that can make or break job creation plans. "It's the uncertainty that gets them [smaller companies]," Stibel said.
China remains a key uncertainty as investors try to unravel the slowdown in the world's second-largest economy, and its impact on global growth. "The question on everyone's mind is how tightly tied are we to the global markets," Stibel added.
'Feeling better'
For now, small-business owners planning to hire include Gina Schaefer. She's co-owner of nine Ace Hardware stores in Washington, D.C., Maryland and Virginia. Schaefer has plans to open two more locations in the new year and has recently hired about a dozen new workers, with plans to bring on about 12 more.
"The mood has gotten lighter and lighter over the years," said Schaefer, who founded her business in 2003. She's friends with colleagues who run hardware stores across the country and the business outlook has improved.
"Stores are feeling better," Schaefer said. "We made it through the recession."
Looking ahead, Schaefer said she wants to continue paying above-average minimum wages to her employees to lift retention and the quality of her hires. From Amazon to big-box home retailers, there has been increased competition in the area. "We have to win on convenience and customer service," Schaefer said.
Her starting wage is $11 an hour, well above the federal minimum of $7.25. "I need to treat employees really well and that means better wages and benefits," she said.
Minimum wage fight
But groups like the International Franchise Association and the NFIB strongly oppose mandated higher pay. An increased minimum wage would lead to higher prices for consumers, lower foot traffic and sales for franchise owners, and ultimately, lost jobs and opportunities for employees to become managers or franchise owners, said International Franchise Association CEO Steve Caldeira. He made the comments in a prepared statement.
The minimum wage fight, meanwhile, will only intensify into this election year.
"Small-business owners will be listening to the president's address tonight hoping to hear him talk about things that will grow the economy and help the little guys," said Dunkelberg of the NFIB. In his last State of the Union address, President Barack Obama is expected to outline his legacy and address issues including the minimum wage.