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Economy in Brief

U.S. Small Business Optimism Jumps to New High
by Tom Moeller  December 9, 2014

The National Federation of Independent Business reported that its Small Business Optimism Index for November improved to 98.1 following an unrevised gain to 96.1 during October. The latest level was the highest since February 2007.

Improvement in the component series versus October included the percentage of firms expecting higher real sales. The percentage planning to increase employment rose to its highest level since July but the percentage indicating few or no qualified applicants for job positions remained near its cycle high. 

The percentage of companies indicated that now was a good time to expand the business held near its recovery peak. The percentage indicating that credit was harder to get ticked up m/m but remained near the lowest level since 2006. The percentage planning to add to inventories slipped versus its recent high as did the percentage planning capital expenditures.

On the pricing front, the percentage of firms raising prices returned to the lowest level in nine months. The percentage planning price increases ticked lower. Labor's pricing power firmed somewhat. The percentage of firms raising worker compensation gained to its highest point in three months. The percentage planning to raise compensation returned to its highest since March 2008.

The most important problems faced by small business were taxes (23%), government requirements (22%), poor sales (12%), quality of labor (10%), competition from large businesses (8%), insurance cost & availability (7%), cost of labor (5%), inflation (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.

National Federation of Independent Business Nov Oct Sep Nov'13 2013 2012 2011
Small Business Optimism Index (SA, 1986=100) 98.1 96.1 95.3 92.5 92.4 92.2 91.4
Firms Expecting Higher Real Sales In Six Months (SA, Net %) 14 9 5 3 4 2 3
Firms Expecting Economy To Improve (SA, Net %) 13 -3 -2 -20 -15 -9 -9
Firms Planning to Increase Employment (SA, Net %) 11 10 9 9 6 4 3
Firms With Few or No Qualified Applicants For Job Openings (SA, %) 45 45 42 44 39 35 32
Firms Reporting That Credit Was Harder To Get (SA, Net %) 5 4 7 6 6 8 10
Firms Raising Average Selling Prices (SA, Net %) 4 8 4 2 2 4 5
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