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Economy in Brief

U.S. Small Business Optimism Ticks Higher
by Tom Moeller  August 13, 2013

The National Federation of Independent Business reported that its Small Business Optimism Index nudged up during July to a seasonally adjusted 94.1 from 93.5 in June. The gain did not fully make up June's decline and thus remained just below its highest level of the economic expansion.

Moving sharply higher was the percentage of firms reporting that now was a good time to expand the business. Also moving significantly higher was the percentage of firms planning to increase employment. However, the percentage of firms who couldn't fill positions right now continued to rise. Finally, the percentage of those firms expecting higher real sales in six months was rising. Offsetting these gains was a lessened percentage of firms expecting the economy to improve as well as fewer expecting credit conditions to ease. Stable was the percentage of firms looking to expand capital expenditures.

Slipping after earlier increases was the percent of firms raising average selling prices. Also, the percent planning to raise prices fell to its least since December 2011. The percent of firms raising worker compensation remained slightly off its high but the percent planning to raise compensation rose sharply, to its highest level since February of last year.

The most important problems faced by small business were taxes (a lower 21%), government requirements (21%), poor sales (16%), insurance cost & availability (8%), quality of labor (7%), competition from large businesses (6%), inflation (5%), cost of labor (5%) 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 Jul Jun May Jul'12 2012 2011 2010
Small Business Optimism Index (SA, 1986=100) 94.1 93.5 94.4 91.2 92.2 91.4 89.9
Firms Expecting Higher Real Sales In Six Months (Net %) 7 5 8 -4 2 3 1
Firms Expecting Economy To Improve (Net %) -6 -4 -5 -8 -9 -9 -1
Firms With Positions Not Able To Fill Right Now (Net %) 20 19 19 15 17 14 10
Firms With Few or No Qualified Applicants For Job Openings (Net %) 40 41 38 38 35 32 27
Firms Reporting That Credit Was Harder To Get (Net %) 6 6 5 7 8 10 13
Firms Raising Avg. Selling Prices (Net %) 4 8 2 8 4 5 -12
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