Global| May 12 2009U.S. Small Business Optimism Recovers
by:Tom Moeller
|in:Economy in Brief
Summary
According to the National Federation of Independent Business (NFIB), small business optimism recovered sharply last month. The index level of 86.8 was its highest level since last November. However, despite the increase business were [...]
According to the National Federation of Independent Business (NFIB), small business optimism recovered sharply last month. The index level of 86.8 was its highest level since last November. However, despite the increase business were far from ebbulient and the index was down 5.1% year-to-year.
During the last ten years there has been a 49% correlation between the level of the NFIB index and the two-quarter change in real GDP.
The latest rise in the index occurred as the percentage expecting the economy to improve jumped to 2% after spending several months in negative territory. Also jumping sharply was the percentage expecting credit conditions to ease while the percentage reporting that now is a good time to expand the business rose to its highest since January. During the next 3-6 months, plans for capital spending actually improved to the highest level since January.
The percentage planning to raise employment made up a sharp March decline but remained a net negative 5%. However, the percentage of respondents with one or more job openings fell to a new low for the series of 9%, the least since 1982. During the last ten years there has been a 71% correlation between the NFIB employment percentage and the y/y change in nonfarm payrolls.
The largest, single most important problems seen by business were poor sales (32%), taxes (22%), government requirements (11%), insurance cost and availability (8%), competition from large businesses (6%) and inflation (4%).
The percentage of firms planning to raise prices ticked up to 1%, near the record low. Price discounts were evident as the percentage of firms actually raising prices fell further into negative territory, and the reading was a record low. During the last ten years there has been a 69% correlation between the y/y 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 NFIB figures can be found in Haver's SURVEYS database.
| Nat'l Federation of Independent Business | April | Marh | Y/Y | 2008 | 2007 | 2006 |
|---|---|---|---|---|---|---|
| Small Business Optimism Index (SA, 1986=100) | 86.8 | 81.0 | -5.1% | 89.8 | 96.7 | 98.9 |
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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