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Economy in Brief

U.S. Small Business Optimism Remains High; Pricing Power Eases
by Tom Moeller  June 12, 2012

The National Federation of Independent Business reported that its May Small Business Optimism Index slipped to 94.4 from an unrevised 94.5 in April. The latest level remained near the economic recovery high of last February. The percentage of firms with one or more job openings rose to 20%, its highest level since April 2008. Those planning to raise employment ticked up to the highest level (6%) since November but the percentage finding few or no qualified job applicants rose to its highest (37%) since September 2008. The percentage expecting the economy to improve also gained to its highest since February of last year.

The percentage of firms reporting that credit was harder rose slightly to 9% but remained well below the early-2009 high of 16%. The percentage planning to raise worker compensation held at 9% compared to the pre-recession high of 20%. The percentage of firms lifting prices reversed two months of increase while just 17% were planning to raise prices, the least since December.

The most important problems faced by small business were taxes (22%), poor sales (a greatly lessened 20%), government requirements (19%), inflation (7%), insurance cost & availability (7%), quality of labor (6%), competition from large businesses (5%), cost of labor (3%) and financial & interest rates (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 May Apr Mar May
11
2011 2010 2009
Small Business Optimism Index (SA,1986=100) 94.4 94.5 92.5 90.9 91.4 89.9 86.7
Firms Expecting Higher Real Sales In Six Months (Net %) 2 6 8 3 3 1 -11
Firms Expecting Economy To Improve (Net %) -2 -5 -8 -5 -9 -1 -0
Firms With One or More Job Openings (Net %) 20 17 15 12 14 10 9
Firms With Few or No Qualified Applicant For Job Openings (Net %) 37 34 32 30 32 27 --
Firms Reporting That Credit Was Harder To Get (Net %) 9 7 11 10 10 13 14
Firms Raising Avg. Selling Prices (Net %) 3 8 6 15 5 -12 -20
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