Global| Mar 11 2008Small Business Optimism Ticked Up
by:Tom Moeller
|in:Economy in Brief
Summary
According to the National Federation of Independent Business (NFIB), small business optimism recovered a modest 1.2% during February after the prior month's 3.0% decline. Optimism remained near the lowest level since during the [...]
According to the National Federation of Independent Business (NFIB), small business optimism recovered a modest 1.2% during February after the prior month's 3.0% decline. Optimism remained near the lowest level since during the recession of 1990.
During the last ten years there has been a 70% correlation between the level of the NFIB index and the two quarter change in real GDP.
Nine percent fewer respondents expected the economy to improve following sharp declines during the prior four months. None of the respondents expected higher real sales in six months. In addition, none of the respondents indicated that now was a good time to expand the business.
The percent planning to increase employment ticked up slightly from the lowest level since early 2006 and the percentage with one or more job openings reversed all of the prior month's improvement. During the last ten years there has been a 72% correlation between the NFIB percentage and the y/y change in nonfarm payrolls.
The percentage of firms planning to increase capital expenditures rose m/m to 26% but that remained below the average of 29% last year, 30% in 2006 and 32% in 2005.
The percentage of firms actually raising prices rose m/m but, at 13%, remained below last year's average of 15%. During the last ten years there has been a 60% correlation between the change in the producer price index and the level of the NFIB price index. The percentage of firms planning to raise prices also fell to 22% versus last year's average 23% and 27% in 2006.
About 24 million businesses exist in the United States. Small business creates 80% of all new jobs in America.
| Nat'l Federation of Independent Business | February | January | Y/Y | 2007 | 2006 | 2005 |
|---|---|---|---|---|---|---|
| Small Business Optimism Index (1986=100) | 92.9 | 91.8 | -5.4% | 96.7 | 98.9 | 101.6 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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