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Economy in Brief

Small Business Optimism Again Slipped Moderately
by Tom Moeller October 11, 2005

The index of small business optimism from the National Federation of Independent Business (NFIB) fell another 0.9% in September following a 0.2% decline the month earlier.

Hurricanes Katrina and Rita drastically cut expectations for sales and for the economy, however, plans for adding to employment and capital expenditures held steady.

During the last ten years there has been a 70% correlation between the level of the NFIB index and the two quarter change in real GDP.

The percentage of firms with one or more job openings slipped slightly to 23%. During the last ten years there has been a 67% correlation between hiring plans and the three month growth in nonfarm payrolls.

The percentage of firms planning to raise average selling prices held steady m/m at 27% up from 26% during all of last year. During the last ten years there has been a 60% correlation between the change in the producer price index and the level of the NFIB price index.

About 24 million businesses exist in the United States. Small business creates 80% of all new jobs in America.

The latest press release from the NFIB is available here.

Nat'l Federation of Independent Business Sept Aug Y/Y 2004 2003 2002
Small Business Optimism Index (1986=100) 100.0 100.9 -4.3% 104.6 101.3 101.2
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