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Economy in Brief

U.S. Small Businesses Lack Enthusiasm Near Yearend
by Tom Moeller  December 10, 2013

The National Federation of Independent Business reported that its Small Business Optimism Index rose to 92.5 during November. That recouped, however, just a piece of its sharp October decline to an unrevised 91.6. The latest figure remained down sharply from the May high of 94.4. 

Cautious optimism ruled the report. Just 3% expected higher real sales in six months, nearly the least since March. The percentage of firms expecting the economy to improve fell to -20%, its least since March. Suggesting that labor market conditions remained tight, a much higher 23 percent of firms had positions they were not able to fill right now, the most since before the recession. An increased 9% were planning to increase employment but a higher 44% of firms found few or no qualified applicants for job openings, also the most since before the recession.

A lessened 2% of firms were raising average selling prices, but an improved 19% planned to do so in the future. A greatly increased 14% planned to increase worker compensation, the most since April 2008.

The most important problems faced by small business were government requirements (22%), taxes (21%), poor sales (15%), insurance cost & availability (11%), competition from large businesses (8%), quality of labor (8%), cost of labor (5%), inflation (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 Nov Oct Sep Nov'12 2012 2011 2010
Small Business Optimism Index (SA, 1986=100) 92.5 91.6 93.9 87.5 92.2 91.4 89.9
Firms Expecting Higher Real Sales In Six Months (Net %) 3 2 8 -5 2 3 1
Firms Expecting Economy To Improve (Net %) -20 -17 -10 -35 -9 -9 -1
Firms Planning to Increase Employment (Net %) 9 5 9 5 4 3 1
Firms With Few or No Qualified Applicants For Job Openings (Net %) 44 40 41 36 35 32 27
Firms Reporting That Credit Was Harder To Get (Net %) 6 6 5 9 8 10 13
Firms Raising Avg. Selling Prices (Net %) 2 5 1 0 4 5 -12
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