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Economy in Brief

U.S. Small Business Optimism Improves Further
by Tom Moeller  January 10, 2012

Small businesses are gaining more confidence in the economy. The National Federation of Independent Business indicated that its December index of small business optimism rose to 93.8 from an unrevised 92.0 in November. The latest figure was the highest since last February. The percentage of firms feeling that now is a good time to expand the business was its highest since September, 2008. Also, improvement in firms' expectations for higher sales in six months rose to its highest since February while the reading for the economy was its best since May.

The job openings reading slipped m/m but remained near the highest of the economic recovery. The percentage of firms planning to increase employment also slipped m/m but was nearly the highest since October, 2008. The percentage of firms feeling that credit was harder to get fell to just 10%. Again, no firms, on balance, were raising prices, its lowest level since January. The percentage of firms planning to raise prices slipped to a low 14%.

The most important problems faced by small business were poor sales (23%, greatly reduced from two years ago), taxes (21%), government requirements (20%, the highest since 1996), insurance cost & availability (8%), competition from large businesses (7%), inflation (5%, a twelve-month low), quality of labor (5%), 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.

National Federation of Independent Business Dec Nov Oct Dec'10 2011 2010 2009
Small Business Optimism Index (SA,1986=100) 93.8 92.0 90.2 92.6 91.4 89.9 86.7
Firms Expecting Higher Real Sales In Six Months (Net %) 9 4 -4 8 3 1 -11
Firms Expecting Economy To Improve (Net %) -8 -12 -16 9 -9 -1 -0
Firms With One or More Job Openings (Net %) 15 16 13 13 14 10 9
Firms Reporting That Credit Was Harder To Get (Net %) 8 10 11 12 10 13 14
Firms Raising Avg. Selling Prices (Net %) 0 0 -1 -5 5 -12 -20
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