Global| May 14 2008U.S. Small Business Optimism Recovered Slightly, Pricing Pressure Strong
by:Tom Moeller
|in:Economy in Brief
Summary
The National Federation of Independent Business (NFIB) reported that small business optimism during April gained back just more than half of its sharp drop in March. The 2.1% m/m increase to a reading of 91.5 followed a 3.6% March [...]
The National Federation of Independent Business (NFIB) reported that small business optimism during April gained back just more than half of its sharp drop in March. The 2.1% m/m increase to a reading of 91.5 followed a 3.6% March drop that had been to the lowest level since the short, "credit crunch" recession of 1980.
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 actually raising prices again rose m/m, to 20% which was the highest level since August, 2006. During the last ten years there has been a 64% correlation between the y/y change in the producer price index and the level of the NFIB price index. The percentage of firms planning to raise prices also rose to 31%, its highest since late 2005.
Twelve percent fewer respondents expected the economy to improve and only five percent (up from 3% in March) of the respondents expected to raise employment. The latest was near the least since 2003. Twenty one percent of firms had one or more job openings. During the last ten years there has been a 71% correlation between the NFIB employment percentage and the y/y change in nonfarm payrolls.
Nine percent of firms indicated that credit was harder to get. That was near the highest level since 1993 and that was more than double the percentage during 2004.
Only six percent of respondents, up from five percent in March, thought that now was a good time to expand the business, the least since 1982, and expectations for earnings improved just slightly.
About 24 million businesses exist in the United States. Small business creates 80% of all new jobs in America.
The NFIB figures can be found in Haver's SURVEYS database.
Credit, Housing, Commodities, and the Economy is yesterday's speech by Janet L. Yellen, President and CEO, Federal Reserve Bank of San Francisco and it is available here.
| Nat'l Federation of Independent Business | April | March | Y/Y | 2007 | 2006 | 2005 |
|---|---|---|---|---|---|---|
| Small Business Optimism Index (1986=100) | 91.5 | 89.6 | -5.5% | 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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