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Economy in Brief

U.S. Small Business Optimism Improves
by Tom Moeller   November 09, 2010

Small businesses optimism improved last month, finally. Following four months in the doldrums, the National Federation of Independent Business indicated that their index of small business optimism jumped to 91.7 last month from 89.0 in September, near where it had been stuck since August. The largest improvements were in the percent of firms expecting the economy to improve as well as those planning to increase employment. Also, the percentage reporting that credit was harder to get fell to its least since November 2008. Finally, improved was the percentage of firms expecting higher sales in six months. Also, more firms reported that inventories were too low.

Disappointing, however, was that fewer firms had a job opening now. Also, the percent expecting to make a capital expenditure in the next six months fell slightly.A higher percentage of firms were planning to raise prices. Also, the percentage cutting prices now rose to its least since December of 2008. In tandem, worker compensation over the past 3-6 months was raised by the most since June and those planning to raise compensation rose as well.

The most important problems faced by small business were poor sales (30%), taxes (20%), government requirements (17%), competition from large businesses (7%), insurance cost & availability (8%), inflation (4%), quality of labor (3%) and financial & interest rates (3%). The percent with few or no qualified job applicants for job openings slipped to 28% though that still was up from its December low of 22% .

Roughly 24 million small businesses exist in the U.S. and they create 80% of all new jobs. The NFIB figures can be found in Haver's SURVEYS database.

Nat'l Federation of Independent Business Oct. Sept. Aug. Oct.'09 2009 2008 2007
Small Business Optimism Index (SA, 1986=100) 91.7 89.0 88.8 89.1 86.7 89.8 96.7
 Firms Expecting Economy To Improve (Net %) 8 -3 -8 11 -0 -10 -4
 Firms With One or More Job Openings (Net %) 10 11 11 8 9 18 24
 Firms Reporting That Credit Was Harder To Get (Net %) 11 14 12 14 14 9 6
 Firms Raising Avg. Selling Prices (Net %) -5 -11 -8 -17 -20 17 15
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