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Economy in Brief

U.S. Small Business Optimism Highest Since 2007
by Tom Moeller  February 8, 2011

Small business confidence is on the mend. The National Federation of Independent Business indicated that their index of small business optimism rose to 94.1 in January from 92.6 in December. The latest was the highest level since December 2007. Sharp improvement was reported in the percentage of firms expecting higher real sales in six months to its highest since 2007. Also improving was the percent expecting the economy to improve and higher real earnings this quarter over last. The percent of firms reporting that now was a good time to expand their business held constant at an improved level.

The number of firms with a job opening now held at its highest since December 2008 but the percentage of firms planning to add jobs slipped. Also, the percent expecting to make a capital expenditure in the next six months increased to its highest since 2008. Finally, the percentage of firms planning to raise prices also rose to its highest since late-2008, while the percentage of firms currently raising prices also improved. In tandem, raising worker compensation was its highest since 2008.

The most important problems faced by small business were poor sales (reduced to 27%), taxes (19%), government requirements (17%), insurance cost and availability (8%), competition from large businesses (7%), inflation (5%), quality of labor (5%) and financial & interest rates (3%) .The percent with few or no qualified job applicants for job openings remained at 28% though that still was up from its 2009 low of 21% .

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.

The Big Impact of Small Business from the Federal Reserve Bank of Atlanta is available here.

Nat'l Federation of Independent Business Jan Dec Nov Jan'10 2010 2009 2008
Small Business Optimism Index (SA,1986=100) 94.1 92.6 93.2 89.3 89.9 86.7 89.8
  Firms Expecting Higher Real Sales In Six Months (Net %) 13 8 6 3 1 -11 -7
  Firms Expecting Economy To Improve (Net %) 10 9 16 1 -1 -0 -10
  Firms With One or More Job Openings (Net %) 13 13 9 10 10 9 18
  Firms Reporting That Credit Was Harder To Get (Net %) 10 12 11 14 13 14 9
  Firms Raising Avg. Selling Prices (Net %) -4 -5 -4 -18 -12 -20 17
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