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Economy in Brief

U.S. Small Business Optimism Improves M/M, But Worries Persist
by Tom Moeller  November 13, 2012

The National Federation of Independent Business indicated that its October Index of Small Business Optimism improved to 93.1 from 92.9 in September. While the figure was well above the recession low, it remained depressed versus past economic expansions. A stable 2% of firms expected the economy to improve but that compared to 20%+ at this stage of past economic recoveries. The same can be observed by the 3% which expected higher real sales in six months. The percent of firms with one or more job openings slipped m/m to a relatively low 16%. A modest 4% percent of firms planed to increase employment and a relatively low 22% planned on increasing capital expenditures.

The percentage of firms reporting that credit was harder to get fell to 7%, down sharply from the early-2009 high of 16%. The 9% of firms planning to raise worker compensation was up from the recession low of 0%. The percentage of firms lifting prices slipped to 5% while the 16% who were planning to raise prices was up from none at the recession low.

The most important problems faced by small business were poor sales (22%), taxes (20%), government requirements (19%), insurance cost & availability (8%), competition from large businesses (7%), inflation (6%), quality of labor (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 typical NFIB member employs 10 people and reports gross sales of about $500,000 a year. The NFIB figures can be found in Haver's SURVEYS database. 


National Federation of Independent Business Oct Sep Aug Oct'11 2011 2010 2009
Small Business Optimism Index (SA,1986=100) 93.1 92.8 92.9 90.2 91.4 89.9 86.7
Firms Expecting Higher Real Sales In Six Months (Net %) 3 1 1 -4 3 1 -11
Firms Expecting Economy To Improve (Net %) 2 2 -2 -16 -9 -1 -0
Firms With One or More Job Openings (Net %) 16 17 18 14 14 10 9
Firms With Few or No Qualified Applicant For Job Openings (Net %) 38 41 37 31 32 27 --
Firms Reporting That Credit Was Harder To Get (Net %) 7 6 7 11 10 13 14
Firms Raising Avg. Selling Prices (Net %) 5 6 9 -1 5 -12 -20
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