Global| Dec 08 2009U.S. Small Business Optimism Stutters
by:Tom Moeller
|in:Economy in Brief
Summary
After improving this spring, small business' optimism has leveled off. The National Federation of Independent Business (NFIB) reported their small business optimism index during November dipped 0.9% to 88.3 after two months of slight [...]
After
improving this spring, small business' optimism has leveled off. The
National Federation of Independent Business (NFIB) reported their small
business optimism index during November dipped 0.9% to 88.3 after two
months of slight increase. During the last ten years, there
has been an 85% correlation between the level of the NFIB index and the
two-quarter change in real GDP.
The percentage of small businesses expecting the economy to improve fell sharply to 3 from the May high of 12. The percentage which thought that now was a good time to expand the business also leveled off at 8 though it has sharply improved from this winter.
Hiring
intentions have responded negatively to the stall in
overall sentiment. The percentage of firms planning to raise employment
remained in a net-layoff region, although planned layoffs have eased
sharply from a March low. The percentage of firms with one or more job
openings held at just 8% during December, the lowest level since 1982.
During the last ten years there has been a 74% correlation between the
NFIB employment percentage and the six-month change in nonfarm
payrolls. Also stable in the negative region was the percentage
expecting credit conditions to ease.
On the
pricing front, conditions
eased. The percentage of firms actually raising
prices held at a depressed -17% (indicating deflation) and
remained near the record low. During the last ten years there
has been a 60% correlation between the six-month change in the producer
price index and the level of the NFIB price index. The
percentage of firms planning to raise prices
slipped slightly to a net 4 though that remained up from the March low
of zero. Worker compensation improved modestly.
The largest, single most important problems seen by business were poor sales (33%), taxes (20%, near its highest level since 2007), government requirements (13%), insurance cost & availability (8%), competition from large businesses (6%) and inflation (3%).
About 24 million small businesses exist in the United States. Small business creates 80% of all new jobs in America and the NFIB figures can be found in Haver's SURVEYS database.
| Nat'l Federation of Independent Business | November | October | September | Y/Y | 2008 | 2007 | 2006 |
|---|---|---|---|---|---|---|---|
| Small Business Optimism Index (SA, 1986=100) | 88.3 | 89.1 | 88.8 | 0.6% | 89.8 | 96.7 | 98.9 |
| Percent of Firms Expecting Economy To Improve | 3 | 11 | 8 | -2 | -10 | -4 | -1 |
| Percent of Firms With One or More Job Openings | 8 | 8 | 8 | 14 | 18 | 24 | 25 |
| Percent of Firms Raising Avg. Selling Pric1es (Net) | -17 | -17 | -21 | 0 | 17 | 15 | 20 |
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.
More Economy in Brief
