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Economy in Brief

U.S. Small Business Optimism Recovers Further
by Tom Moeller  February 12, 2013

The National Federation of Independent Business reported that its January Small Business Optimism Index rose for the second straight month. The advance to 88.9 was from 88.0 in December and 87.5 in November, the lowest reading since early-2010. A lessened net negative 30% of firms expected the economy to improve. The percent expecting higher real sales in six months also gained for the second consecutive month. The percent of firms with positions they were not able to fill improved m/m to 18% and a modest 3% percent of firms planned to increase employment.

The percentage of firms planning to raise worker compensation recovered to 7% but remained below its February 2012 high of 12%. The percentage of firms reporting that credit was harder to get fell to 7% and remained down versus the early-2009 high of 16%. A slightly improved 2% of firms were lifting average selling prices and a higher 21% were planning to raise prices.

The most important problems faced by small business were taxes (21%), government requirements (21%), poor sales (19%), insurance cost & availability (8%), competition from large businesses (6%), inflation (5%), 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. 

A Painfully Slow Recovery for America's Workers: Causes, Implications, and the Federal Reserve's Response is the title of yesterday's speech by Fed Vice Chair Janet L. Yellen and it can be found here.


National Federation of Independent Business Jan Dec Nov Jan'12 2012 2011 2010
Small Business Optimism Index (SA,1986=100) 88.9 88.0 87.5 93.9 92.2 91.4 89.9
Firms Expecting Higher Real Sales In Six Months (Net %) -1 -2 -5 10 2 3 1
Firms Expecting Economy To Improve (Net %) -30 -35 -35 -3 -9 -9 -1
Firms With Positions Not Able To Fill Right Now (Net %) 18 16 17 18 17 14 10
Firms With Few or No Qualified Applicants For Job Openings (Net %) 34 33 36 31 35 32 27
Firms Reporting That Credit Was Harder To Get (Net %) 7 9 9 8 8 10 13
Firms Raising Avg. Selling Prices (Net %) 2 0 0 -1 4 5 -12
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