Global| Jan 13 2015U.S. Small Business Optimism Surges
by:Tom Moeller
|in:Economy in Brief
Summary
The National Federation of Independent Business reported that its Small Business Optimism Index for December jumped to 100.4 following an unrevised gain to 98.1 during November. The latest level was the highest since October 2006. For [...]
The National Federation of Independent Business reported that its Small Business Optimism Index for December jumped to 100.4 following an unrevised gain to 98.1 during November. The latest level was the highest since October 2006. For all of last year, the index rose to 95.6, its highest point also since 2006.
Improvement in the component series was greatest in the percentage of firms expecting higher real sales. Also continuing to strengthen was the percentage planning to increase employment. It rose to its highest level since August 2007 but the percentage indicating few or no qualified applicants for job positions rose slightly to near the cycle high.
The percentage of companies indicated that now was a good time to expand the business jumped to its highest since July 2007 as the percentage indicating that credit was harder to get fell to the lowest level since September 2006. The percentage planning to add to inventories surged to an eight year high and the percentage planning capital expenditures jumped to the highest point since late 2007.
On the pricing front, the percentage of firms raising prices remained at the lowest level in nine months. The percentage planning price increases rebounded to the highest level since July. Labor's pricing power strengthened. The percentage of firms raising worker compensation gained to its highest point since early 2008. The percentage planning to raise compensation jumped to the 2007 high.
The most important problems faced by small business were taxes (27%), government requirements (22%), poor sales (11%), quality of labor (11%), competition from large businesses (8%), insurance cost & availability (8%), cost of labor (4%), inflation (3%) and financial & interest rates (1%).
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 | Dec | Nov | Oct | Dec'13 | 2014 | 2013 | 2012 |
|---|---|---|---|---|---|---|---|
| Small Business Optimism Index (SA, 1986=100) | 100.4 | 98.1 | 96.1 | 93.9 | 95.6 | 92.4 | 92.2 |
| Firms Expecting Higher Real Sales In Six Months (SA, Net %) | 20 | 14 | 9 | 8 | 11 | 4 | 2 |
| Firms Expecting Economy To Improve (SA, Net %) | 12 | 13 | -3 | -11 | -5 | -15 | -9 |
| Firms Planning to Increase Employment (SA, Net %) | 15 | 11 | 10 | 8 | 10 | 6 | 4 |
| Firms With Few or No Qualified Applicants For Job Openings (SA, %) | 43 | 45 | 45 | 38 | 43 | 39 | 35 |
| Firms Reporting That Credit Was Harder To Get (SA, Net %) | 3 | 5 | 4 | 7 | 6 | 6 | 8 |
| Firms Raising Average Selling Prices (SA, Net %) | 4 | 4 | 8 | -1 | 8 | 2 | 4 |
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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