U.S. Small Businesses Lack Enthusiasm Near Yearend

The National Federation of Independent Business reported that its Small Business Optimism Index rose to 92.5 during November. That recouped, however, just a piece of its sharp October decline to an unrevised 91.6. The latest figure remained down sharply from the May high of 94.4. 

Cautious optimism ruled the report. Just 3% expected higher real sales in six months, nearly the least since March. The percentage of firms expecting the economy to improve fell to -20%, its least since March. Suggesting that labor market conditions remained tight, a much higher 23 percent of firms had positions they were not able to fill right now, the most since before the recession. An increased 9% were planning to increase employment but a higher 44% of firms found few or no qualified applicants for job openings, also the most since before the recession.

A lessened 2% of firms were raising average selling prices, but an improved 19% planned to do so in the future. A greatly increased 14% planned to increase worker compensation, the most since April 2008.

The most important problems faced by small business were government requirements (22%), taxes (21%), poor sales (15%), insurance cost & availability (11%), competition from large businesses (8%), quality of labor (8%), cost of labor (5%), inflation (4%) 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.

The Bureau of Labor Statistics reported in its Job Openings & Labor Turnover Survey (JOLTS) that the September job openings rate rose to 2.8% from a downwardly-revised 2.7% in August. The job openings rate is the number of job openings on the last business day of the month as a percent of total employment plus job openings. The actual number of job openings rose 8.6% y/y to 3.913 million.

The private-sector job openings rate increased to 3.0% from 2.9% in August. The rate in education & health services held at a cycle-high of 3.4%. Also, the rate in professional & business services rose to 3.5% but remained down from the 4.2% high early last year. The rate in manufacturing slipped to 2.1%.  In the government sector, the job openings rate held at 1.7%, its lowest level since December.

The hires rate improved to 3.4% from 3.3% in August, equaling the expansion's high. The hires rate is the number of hires during the month divided by employment. The hires rate in the private sector rose to 3.8%. The hires rate of 5.4% in leisure & hospitality remained down from its March '12 high of 5.9%. Also, the relatively high 5.1% in construction was well below the 6.5% rates common early in 2011. The hiring rate of 4.1% in retail trade was down from August while the hiring rate in education & health services dropped sharply to 2.5%. In the factory sector, the rate was stable m/m at 2.1%, improved from 1.7% six months ago. The government sector hires rate slipped to 1.3%.

The number of hires rose 0.6% m/m in September and were 8.7% above last year. Private sector hires advanced 9.1% y/y. Hiring in professional & business services grew 18.1% y/y while new jobs grew 12.8% y/y in the factory sector. Hiring in retail trade advanced 12.5% y/y and hiring in leisure & hospitality grew 8.6% y/y. Government sector hiring rose 3.2% y/y.

The job separations rate held steady at 3.2% during September as the actual number of separations increased 9.2% y/y. Separations include quits, layoffs, discharges, and other separations as well as retirements. The layoff & discharge rate edged up to 1.3% in September. That's versus a recession peak of 2.0% in early 2009. The private sector layoff rate was steady at 1.4% while the government's rate gained to 0.5%.

The JOLTS survey dates only to December 2000 and the figures are available in Haver's USECON database.

The price for a gallon of regular gasoline prices held at $3.27 (-2.4% y/y) last week. Still, prices were down 13.5% versus the $3.78 per gallon peak reached late in February. Much of the decline reflects less driving this time of year. Haver Analytics constructs seasonal factors to account for this seasonal volatility. The adjusted price rose slightly last week to $3.57 per gallon, its highest level since late July.

The per barrel cost of WTI crude oil increased to $96.33 (10.1% y/y) last week, the highest level since late October. Prices, nevertheless, remained down sharply from the $108.67 high in early September. Yesterday, prices rose further to $97.34. Brent crude oil prices moved up last week to $111.26 per barrel (1.3% y/y), but yesterday fell back to $109.49 per barrel.

Natural gas prices increased last week to $3.94 per mmbtu (16.3% y/y), the highest level since late-May. Yesterday, prices jumped further to $4.23 and were roughly even with the April peak of $4.26.

The demand for all petroleum products increased 5.6% y/y last week. Gasoline demand gained 3.3% y/y last week. Residual fuel oil needs, used for heating, fell 34.0% y/y but distillate demand held steady y/y. Inventories of crude oil and petroleum products were roughly unchanged y/y.

The energy price data are reported by the U.S. Department of Energy and can be found in Haver's WEEKLY database. The daily figures are in DAILY and the petroleum demand and inventory figures are in OILWKLY.