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Economy in Brief

U.S. Small Business Optimism Increases Further
by Tom Moeller  March 8, 2011

The National Federation of Independent Business indicated that its index of small business optimism rose to 94.5 in February from an unrevised 94.1 in January. The latest remained the highest level since December 2007. Improvement amongst the sub-series was mixed. The percentage of firms expecting higher real sales in six months rose to its highest since 2007. The percentage reporting higher earnings this quarter and those reporting that inventories were too low also increased. Working the other were declines in the percentage expecting the economy to improve and the percentage saying now was a good time to expand the business.

The number of firms with job openings now rose to its highest since September 2008 but the percentage of firms planning to add jobs also improved. The percentage expecting to make a capital expenditure in the next six months held constant at an improved level. Finally, the percentage of firms planning to raise prices increased further to its highest since late-2008, while the percentage of firms currently raising prices turned positive for the first time since October 2008.

Businesses making a capital expenditure during the next six months slipped to 49% and the percentage with few or no qualified job applicants for job openings rose to 30%.

The most important problems faced by small business were poor sales (28%), government requirements (19%), taxes (17%), insurance cost and availability (8%), quality of labor (7%), competition from large businesses (5%), inflation (5%) and financial & interest rates (4%).

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 Feb Jan Dec Feb'10 2010 2009 2008
Small Business Optimism Index (SA,1986=100) 94.5 94.1 92.6 88.0 89.9 86.7 89.8
  Firms Expecting Higher Real Sales In Six Months (Net %) 14 13 8 0 1 -11 -7
  Firms Expecting Economy To Improve (Net %) 9 10 9 -9 -1 -0 -10
  Firms With One or More Job Openings (Net %) 15 13 13 11 10 9 18
  Firms Reporting That Credit Was Harder To Get (Net %) 11 10 12 12 13 14 9
  Firms Raising Avg. Selling Prices (Net %) 5 -4 -5 -21 -12 -20 17
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