Global| Jun 11 2013U.S. Small Business Optimism Continues To Improve
by:Tom Moeller
|in:Economy in Brief
Summary
Small businesses are feeling better about the prospects for growth. The National Federation of Independent Business reported that its Small Business Optimism Index increased further during May to a seasonally adjusted 94.4 from 92.1. [...]
Small businesses are feeling better about the prospects for growth. The National Federation of Independent Business reported that its Small Business Optimism Index increased further during May to a seasonally adjusted 94.4 from 92.1. The 2.3 point increase was to the highest level since April of last year.
Again driving last month's improvement was a rise in the percentage of firms expecting the economy to improve. In addition, a strengthened net 8% of firms expected higher real sales in six months, its best level since February of last year. Planned inventory investment also improved to its highest level (3.0%) since before the recession. A slightly diminished 5% of firms planned to increase employment. A continued scarcity of qualified labor was illustrated by the 19% of firms with positions not able to be filled right now, compared to 8% at the 2009 low. Finally, the percentage of firms planning to raise worker compensation held at 9% but remained below last year's high of 12%.
The percentage of firms reporting that credit was harder to get fell back to 5% and remained down versus the early-2009 high of 16%. Just 2% of firms were lifting average selling prices and a reduced 15% were planning to raise prices, the least since December 2011.
The most important problems faced by small business were taxes (24%), government requirements (23%), poor sales (16%), insurance cost & availability (9%), competition from large businesses (8%), quality of labor (6%), inflation (4%), cost of labor (4%) 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 | May | Apr | Mar | May'12 | 2012 | 2011 | 2010 |
|---|---|---|---|---|---|---|---|
| Small Business Optimism Index (SA, 1986=100) | 94.4 | 92.1 | 89.5 | 94.4 | 92.2 | 91.4 | 89.9 |
| Firms Expecting Higher Real Sales In Six Months (Net %) | 8 | 4 | -4 | 2 | 2 | 3 | 1 |
| Firms Expecting Economy To Improve (Net %) | -5 | -15 | -28 | -2 | -9 | -9 | -1 |
| Firms With Positions Not Able To Fill Right Now (Net %) | 19 | 18 | 18 | 20 | 17 | 14 | 10 |
| Firms With Few or No Qualified Applicants For Job Openings (Net %) | 38 | 38 | 36 | 37 | 35 | 32 | 27 |
| Firms Reporting That Credit Was Harder To Get (Net %) | 5 | 7 | 4 | 9 | 8 | 10 | 13 |
| Firms Raising Avg. Selling Prices (Net %) | 2 | 3 | -1 | 8 | 4 | 5 | -12 |
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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