Global| Aug 12 2014U.S. Small Business Optimism Improves Slightly; Pricing Remains Firm
by:Tom Moeller
|in:Economy in Brief
Summary
The National Federation of Independent Business reported that its Small Business Optimism Index edged up to 95.7 during July, making up half of its June decline. The latest level remained near its highest since September 2007, just [...]
The National Federation of Independent Business reported that its Small Business Optimism Index edged up to 95.7 during July, making up half of its June decline. The latest level remained near its highest since September 2007, just before the recession began.
Improvement was evident in most component series including plans to increase employment, which jumped to the highest level since 1987. Firms with positions unable to fill slipped m/m but also remained near the 1987 high. Expectations for economic improvement and the percentage of firms indicating that now was a good time to expand the business moved higher. Also improving modestly were the percentage of firms planning to raise inventories and planning to make capital expenditures. These latter increases followed sharp declines. To the downside were the readings of the percentage of firms expecting higher real sales in six months and the percentage indicating that inventories were too low.
On the pricing front, the percentage of firms raising prices now remained near the seven year high while the percentage planning future price increases improved slightly. Labor's pricing power also remained firm, especially the percentage of firms planning to raise worker compensation.
The most important problems faced by small business were taxes (22%), government requirements (22%), poor sales (13%), quality of labor (10%), competition from large businesses (9%), insurance cost & availability (8%), cost of labor (5%), inflation (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 | Jul | Jun | May | Jul'13 | 2013 | 2012 | 2011 |
|---|---|---|---|---|---|---|---|
| Small Business Optimism Index (SA, 1986=100) | 95.7 | 95.0 | 96.6 | 94.1 | 92.4 | 92.2 | 91.4 |
| Firms Expecting Higher Real Sales In Six Months (Net %) | 10 | 11 | 15 | 7 | 4 | 2 | 3 |
| Firms Expecting Economy To Improve (Net %) | -6 | -10 | 0 | -6 | -15 | -9 | -9 |
| Firms Planning to Increase Employment (Net %) | 13 | 12 | 10 | 9 | 6 | 4 | 3 |
| Firms With Few or No Qualified Applicants For Job Openings (Net %) | 42 | 43 | 46 | 40 | 39 | 35 | 32 |
| Firms Reporting That Credit Was Harder To Get (Net %) | 5 | 6 | 6 | 6 | 6 | 8 | 10 |
| Firms Raising Average Selling Prices (Net %) | 14 | 14 | 12 | 4 | 2 | 4 | 5 |
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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