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Economy in Brief

Small Business Optimism Recovered
by Tom Moeller May 9, 2006

Small business optimism in April recovered most of the prior month's decline with a 2.1% rise, according to the National Federation of Independent Business (NFIB).

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.

Respondents expecting higher real sales in six months recovered about half of a precipitous March decline though expectations that the economy would improve remained negative for the second month.

The percentage of firms with one or more job openings improved sharply to the highest level since early 2001. During the last ten years there has been a 72% correlation between the NFIB percentage and the y/y change in nonfarm payrolls.

The percent planning to raise capital expenditures recovered half of the sharp March decline..The percentage of firms planning to raise average selling prices rose to the highest level since January and the percentage of firms actually raising prices rose as well. 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.

Nat'l Federation of Independent Business April Mar Y/Y 2005 2004 2003
Small Business Optimism Index (1986=100) 100.1 98.0 0.3% 101.6 104.6 101.3
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