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Economy in Brief

U.S. Small Business Optimism Reaches Six Month High
by Tom Moeller  May 14, 2013

Small business optimism rebounded last month and more-than-recovered its March weakness. The National Federation of Independent Business reported that its Small Business Optimism Index jumped during April to a seasonally adjusted 92.0 from 89.5. The 2.5 point increase was to the highest level since October.

Powering last month's improvement was a substantial rise in the percentage of firms expecting the economy to improve. In addition, a strengthened net 4% of firms expected higher real sales in six months, its best level in twelve months. Planned inventory investment also improved to its highest level (0.0%) since last spring. A much greater net 6% of firms planned to increase employment. A continued scarcity of qualified labor was illustrated by the 18% of firms with positions not able to be filled right now, compared to 8% at the 2009 low. Finally, the percentage of firms planning to raise worker compensation held at 9% and remained below last year's high of 12%.

The percentage of firms reporting that credit was harder to get rebounded to 7% but remained down versus the early-2009 high of 16%. An improved 3% of firms were lifting average selling prices and a still moderate 18% were planning to raise prices.

The most important problems faced by small business were taxes (23%), government requirements (21%), poor sales (16%), insurance cost & availability (8%), competition from large businesses (8%), quality of labor (7%), inflation (5%), cost of labor (4%) and financial & interest rates (2%).

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 Apr Mar Feb Apr'12 2012 2011 2010
Small Business Optimism Index (SA, 1986=100) 92.0 89.5 90.8 94.5 92.2 91.4 89.9
Firms Expecting Higher Real Sales In Six Months (Net %) 4 -4 1 6 2 3 1
Firms Expecting Economy To Improve (Net %) -15 -28 -28 -5 -9 -9 -1
Firms With Positions Not Able To Fill Right Now (Net %) 18 18 21 17 17 14 10
Firms With Few or No Qualified Applicants For Job Openings (Net %) 38 36 34 34 35 32 27
Firms Reporting That Credit Was Harder To Get (Net %) 7 4 7 7 8 10 13
Firms Raising Avg. Selling Prices (Net %) 3 -1 2 8 4 5 -12
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