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Economy in Brief

U.S. Small Business Optimism Continues Lower
by Tom Moeller  September 13, 2011

Small businesses increasingly see growth prospects dim. The National Federation of Independent Business indicated that its August index of small business optimism fell to 88.1 from an unrevised 89.9 in July. The latest was the lowest level since last July. Deterioration was notable for the percentage of firms expecting the economy to improve and for those expecting higher real sales in six months.

Despite deterioration in these measures of economic activity, the percentage of firms with job openings now rose to the high end of its recent range. Moreover, the percentage of firms planning to add jobs reversed its recent downtrend with a gain to the highest level since February. The percentage with few or no qualified job applicants for job openings rose m/m to 33%, its highest since late-2008.

Firms indicating that credit was harder to get jumped to its highest level since July of last year. The percent of firms borrowing at least once a quarter also matched its highest since last September. However, businesses planning capital expenditures during the next six months remained down sharply from the March high. The percentage of firms raising prices fell to 1%, its lowest since January. Moreover, the percentage planning to raise prices fell to 16%, its lowest this year.

The most important problems faced by small business were poor sales (25%), government requirements (19%), taxes (18%), insurance cost & availability (8%), inflation (6%), competition from large businesses (5%), quality of labor (4%), financial & interest rates (4%) and the cost of labor (3%).

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.

Helping Unemployed Borrowers Meet Their Mortgage Payments from the Federal Reserve Bank of New York can be found here.

National Federation of Independent Business Aug Jul Jun Aug
2010 2009 2008
Small Business Optimism Index (SA,1986=100) 88.1 89.9 90.8 88.8 89.9 86.7 89.8
Firms Expecting Higher Real Sales In Six Months (Net %) -12 -2 0 0 1 -11 -7
Firms Expecting Economy To Improve (Net %) -26 -15 -11 -18 -1 -0 -10
Firms With One or More Job Openings (Net %) 15 12 15 11 10 9 18
Firms Reporting That Credit Was Harder To Get (Net %) 13 10 9 12 13 14 9
Firms Raising Avg. Selling Prices (Net %) 1 7 10 -8 -12 -20 17
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