Global| Feb 10 2015U.S. Small Business Optimism Fades Somewhat
by:Tom Moeller
|in:Economy in Brief
Summary
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 [...]
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 |
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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