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Economy in Brief
Empire State Manufacturing Index Eases; Prices Improve
The Empire State Manufacturing Index of General Business
Conditions declined to 19.0 during September from 25.6 in August
British Chamber of Commerce Cuts Forecasts
The British Chamber of Commerce (BCC) today announced cutting its outlook for the UK economy...
U.S. Retail Sales Edge Higher
Total retail sales improved 0.1% (6.6% y/y) during August
following a 0.7% July gain...
U.S. Government Budget Deficit Widens Sharply
Faster growth in spending and a lessened increase in revenues
is a sure formula for widening the budget deficit...
U.S. Industrial Production Posted Solid Increase in August
Industrial production increased a solid 0.4% m/m (4.8% y/y) in August ...
by Tom Moeller February 10, 2015
The National Federation of Independent Business reported that its Small Business Optimism Index for January declined to 97.9 from the unrevised high of 100.4 during December. The figure, nevertheless, remained near its highest level since February 2007.
Movement in the component series was mostly downward last month. The percentage of firms expecting higher real sales backed off somewhat to 16. Also slipping was the percentage planning to increase employment to 14%, but that remained near its recent high. The percentage indicating few or no qualified applicants for job positions eased to 42%, the lowest point since September.
The percentage of companies indicating that now was a good time to expand the business reversed part of its December gain to the highest level since 2007. The percentage indicating that credit was harder to get remained near its least since September 2006. The percentage planning to add to inventories pulled back from its recent high as did the percentage planning capital expenditures in the next 3-6 months, though it remained near its expansion high.
On the pricing front, the percentage of firms raising prices declined to the least since February. The percentage planning price increases reversed its January improvement, continuing its sideways trend. Labor's pricing power remained firm. The percentage of firms raising worker compensation held at its highest point since early 2008. The percentage planning to raise compensation reversed its December strength, falling to a twelve month low.
The most important problems faced by small business were government requirements (22%), taxes (21%), poor sales (13%), quality of labor (11%), insurance & availability (10%), competition from large businesses (7%), cost of labor (5%), inflation (3%) 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 | Jan | Dec | Nov | Jan'14 | 2014 | 2013 | 2012 |
|---|---|---|---|---|---|---|---|
| Small Business Optimism Index (SA, 1986=100) | 97.9 | 100.4 | 98.1 | 94.1 | 95.6 | 92.4 | 92.2 |
| Firms Expecting Higher Real Sales In Six Months (SA, Net %) | 16 | 20 | 14 | 15 | 11 | 4 | 2 |
| Firms Expecting Economy To Improve (SA, Net %) | 0 | 12 | 13 | -11 | -5 | -15 | -9 |
| Firms Planning to Increase Employment (SA, Net %) | 14 | 15 | 11 | 12 | 10 | 6 | 4 |
| Firms With Few or No Qualified Applicants For Job Openings (SA, %) | 42 | 43 | 45 | 38 | 43 | 39 | 35 |
| Firms Reporting That Credit Was Harder To Get (SA, Net %) | 4 | 3 | 5 | 6 | 6 | 6 | 8 |
| Firms Raising Average Selling Prices (SA, Net %) | 3 | 4 | 4 | 2 | 8 | 2 | 4 |
