Global| Jan 10 2006Small Business Optimism Up Slightly
by:Tom Moeller
|in:Economy in Brief
Summary
The index of small business optimism from the National Federation of Independent Business (NFIB) in December recovered a marginal 0.2% of the prior month's 2.4% drop. For the fourth quarter as a whole, optimism did improve 1.4% from [...]
The index of small business optimism from the National Federation of Independent Business (NFIB) in December recovered a marginal 0.2% of the prior month's 2.4% drop. For the fourth quarter as a whole, optimism did improve 1.4% from 3Q but sharp declines early in the year pulled the 2005 levels down 2.8% from averaged during 2004, the first annual drop since 2001.
The marginal m/m improvement reflected fewer firms (22%) firms with one or more job openings and fewer firms (21%) expecting higher real sales in six months offset by slightly more expecting the economy to improve and slightly more expecting higher earnings.
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.
The percentage of firms planning to raise average selling prices backup off sharply from the November high to 27%. The percentage of firms actually raising average selling prices also fell sharply to 18%. 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.
About 24 million businesses exist in the United States. Small business creates 80% of all new jobs in America.
The latest press release from the NFIB is available here.
The National Economy and Monetary Policy in the New Year from Kansas City Federal Reserve Bank President Thomas H. Hoenig can be found here.
| Nat'l Federation of Independent Business | Dec | Nov | Y/Y | 2005 | 2004 | 2003 |
|---|---|---|---|---|---|---|
| Small Business Optimism Index (1986=100) | 101.4 | 101.2 | -4.4% | 101.6 | 104.6 | 101.3 |
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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