Recent Updates

  • China: Industrial Profit (Aug)
  • US: Advance Durable Goods (Aug)
  • Italy: Business & Consumer Surveys (Sep), Contractual Wages (Aug), Large Firms Employment, Earnings & Hours Worked (Jul)
  • Luxembourg: International Trade (Jul)
  • more updates...

Economy in Brief

U.S. Small Business Optimism Continues to Wane
by Tom Moeller  March 8, 2016

The National Federation of Independent Business reported that its Small Business Optimism Index declined 1.1% during February to 92.9 following a 1.4% January fall. It was the lowest level since February 2014. According to the NFIB, the February level remained below the 42-year average of 98.

The percentage of firms expecting higher real sales in six months fell sharply to zero. As for business activity, 8% of firms reported that now was a good time to expand the business, equaling the June 2014 low. The percentage of firms expecting the economy to improve held at -21, down from +12 in December 2014.

A lessened 10% of firms expected to increase employment and a 42% of respondents found few or no qualified candidates to fill job openings, the least since March 2015. Twenty-eight percent of firms had positions they were not able to fill right now, up from 9% in 2009. A lessened net 22% of firms raised worker compensation over the last twelve months, and a sharply lower 12% were expecting to raise it in the next three months, the least since August.

Small businesses' ability to improve pricing remained under pressure. Four percent of firms were lowering prices; twelve percent were raising them in July of 2014. Expectations about the ability to raise prices also deteriorated. A lessened 14% of firms were planning to raise prices, a five-month low.

Credit was more difficult to get as 5% reported trouble, up from 3% at the low. A sharply lower 31% percent of firms felt satisfied that their borrowing needs had been filled in the last three months.

A reduced 21% of firms indicated that taxes were the single most important problem while 19% reported government requirements were the largest single problem. A lessened 12% felt challenged by the quality of labor. An increased 10% reported insurance cost & availability as the largest problem, but a fairly steady 11% indicated poor sales as their biggest problem. An easier 8 percent reported competition from large businesses as the largest problem. A greatly increased 7% reported the cost of labor was the biggest problem, and inflation was indicated by a slightly higher 3% of respondents.

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.

Reflections on Macroeconomics Then and Now is the title of Fed Vice Chairman Stanley Fischer's speech and it can be found here.

National Federation of Independent Business (SA, Net %) Feb Jan Dec Feb'15 2015 2014 2013
Small Business Optimism Index (1986=100) 92.9 93.9 95.2 98.2 96.1 95.6 92.4
Firms Reporting Now is a Good Time To Expand the Business 8 10 8 13 11 10 7
Firms Expecting Higher Real Sales In Six Months 0 3 7 14 8 11 4
Firms Expecting Economy To Improve -21 -21 -15 2 -5 -5 -15
Firms Planning to Increase Employment 10 11 15 12 12 10 6
Firms With Few or No Qualified Applicants For Job Openings 42 45 48 47 46 43 39
Firms Reporting That Credit Was Harder To Get 5 5 5 3 4 6 6
Firms Raising Average Selling Prices -4 -4 -1 3 2 8 2
large image