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Economy in Brief

U.S. Small Business Optimism Continues To Improve
by Tom Moeller  June 11, 2013

Small businesses are feeling better about the prospects for growth. The National Federation of Independent Business reported that its Small Business Optimism Index increased further during May to a seasonally adjusted 94.4 from 92.1. The 2.3 point increase was to the highest level since April of last year.

Again driving last month's improvement was a rise in the percentage of firms expecting the economy to improve. In addition, a strengthened net 8% of firms expected higher real sales in six months, its best level since February of last year. Planned inventory investment also improved to its highest level (3.0%) since before the recession. A slightly diminished 5% of firms planned to increase employment. A continued scarcity of qualified labor was illustrated by the 19% 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% but remained below last year's high of 12%.

The percentage of firms reporting that credit was harder to get fell back to 5% and remained down versus the early-2009 high of 16%. Just 2% of firms were lifting average selling prices and a reduced 15% were planning to raise prices, the least since December 2011.

The most important problems faced by small business were taxes (24%), government requirements (23%), poor sales (16%), insurance cost & availability (9%), competition from large businesses (8%), quality of labor (6%), inflation (4%), 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 May Apr Mar May'12 2012 2011 2010
Small Business Optimism Index (SA, 1986=100) 94.4 92.1 89.5 94.4 92.2 91.4 89.9
Firms Expecting Higher Real Sales In Six Months (Net %) 8 4 -4 2 2 3 1
Firms Expecting Economy To Improve (Net %) -5 -15 -28 -2 -9 -9 -1
Firms With Positions Not Able To Fill Right Now (Net %) 19 18 18 20 17 14 10
Firms With Few or No Qualified Applicants For Job Openings (Net %) 38 38 36 37 35 32 27
Firms Reporting That Credit Was Harder To Get (Net %) 5 7 4 9 8 10 13
Firms Raising Avg. Selling Prices (Net %) 2 3 -1 8 4 5 -12
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