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Highlights From NFIB Small Business Optimism Index
The National Federation of Independent Business (NFIB) has released its Small Business Optimism Index. It has been collecting small business economic trends data with quarterly surveys for forty years, and monthly surveys for 27.
There aren’t as many highlights for small businesses as we’d like to see, but there are a few bright spots.
15% of owners cite weak sales as their top business problem, but owners reported higher sales in the past three months compared to the prior three months, and that 15% is the lowest reading since June of 2008. 7% of owners reported growth in inventories.
Capital spending reached its highest point since early 2008, and the percent of owners planning capital outlays in the next three to six months was up 1 point to 24%.
The percentage of owners raising selling prices was down 3 points to 2%. 23% plan to raise average prices in the next few months (up 3 points).
3% reported reduced worker compensation while 16% reported raising compensation.
4% of owners reported that all credit needs weren’t being met, while 32% said they were. 52% explicitly said that they don’t want loans.
Over half of the noted improvement in sentiment was accounted for by the labor market components, which the federation calls “good news,” despite, expected business conditions deteriorating further than before.
Owners increased employment by 0.05 workers per company last month on average. That’s only half of the figure from October. The figure, however, is seasonally adjusted. 14% of owners added an average of 3.7 workers over the past few months. That’s up 2 points.
12% reduced employment an average of 3.4 workers, and 51% of owners hired or tried to hire in the last three months while 44% reported few or no qualified applicants for open positions.
The good news is that this is the highest hiring activity level since October of 2007.
23% of all owners reported job openings that they couldn’t fill. That’s the highest reading for that since January 2008. 13% reported using temps (down 2% from October). Job creation plans rose 4 points to 9%.
Unfortunately, owners are not incredibly optimistic about the economy in the coming year.
The latest report finds that small business owner sentiment increased by 0.9 points to 92.5, which the federation considers a dismal reading, though this isn’t much different than things have been since the recovery started.
The actual index has remained in the trading range (between 86.4 and 95.4) since the recovery began, which is considerably poor compared to the historical average reading of 100 from 1973-2007.
At least it’s not all doom and gloom. It’s going to be quite interesting to see numbers from the holiday shopping season, which have actually looked pretty good so far.
To read the complete Small Business Index click here.