Global| Oct 14 2014U.S. Small Business Optimism Retreats; Pricing Power Deteriorates Further
by:Tom Moeller
|in:Economy in Brief
Summary
The National Federation of Independent Business reported that its Small Business Optimism Index for September fell to 95.3 following an unrevised improvement to 96.1 during August. Despite the decline, the latest level remained near [...]
The National Federation of Independent Business reported that its Small Business Optimism Index for September fell to 95.3 following an unrevised improvement to 96.1 during August. Despite the decline, the latest level remained near its highest since September 2007, just before the recession began.
Deterioration in the component series versus August included the percentage expecting higher real sales and the percentage planning to increase employment. Collapsing was the percent of businesses with positions they were unable to fill right now. It declined to the lowest level since November. Working the other way, the percentage indicating that now was a good time to expand the business surged to the highest level since December 2007. The percentage that thought the economy would improve gained to its highest point since May and the percent planning to add to inventories returned to its highest level since April.
On the pricing front, the percentage of firms raising prices now fell to its least since February while the percentage planning future price increases fell to the lowest level since July of last year. Labor's pricing power deteriorated somewhat. The percentage of firms raising worker compensation fell to the lowest level since November, however, the percentage planning to raise compensation was stable at the highest level since March 2008.
The most important problems faced by small business were government requirements (22%), taxes (a sharply lower 21%), poor sales (14%), quality of labor (9%), insurance cost & availability (9%), competition from large businesses (8%), cost of labor (4%), 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 | Sep | Aug | Jul | Sep'13 | 2013 | 2012 | 2011 |
|---|---|---|---|---|---|---|---|
| Small Business Optimism Index (SA, 1986=100) | 95.3 | 96.1 | 95.7 | 93.9 | 92.4 | 92.2 | 91.4 |
| Firms Expecting Higher Real Sales In Six Months (SA, Net %) | 5 | 6 | 10 | 8 | 4 | 2 | 3 |
| Firms Expecting Economy To Improve (SA, Net %) | -2 | -3 | -6 | -10 | -15 | -9 | -9 |
| Firms Planning to Increase Employment (SA, Net %) | 9 | 10 | 13 | 9 | 6 | 4 | 3 |
| Firms With Few or No Qualified Applicants For Job Openings (SA, %) | 42 | 46 | 42 | 41 | 39 | 35 | 32 |
| Firms Reporting That Credit Was Harder To Get (SA, Net %) | 7 | 5 | 5 | 5 | 6 | 8 | 10 |
| Firms Raising Average Selling Prices (SA, Net %) | 4 | 6 | 14 | 1 | 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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