Global| May 08 2018U.S. Small Businesses Optimism Is Little Changed; Prices Ease
by:Tom Moeller
|in:Economy in Brief
Summary
The National Federation of Independent Business (NFIB) indicated that its Small Business Optimism Index stood at 104.8 for April, 104.7 in March and was fairly stable y/y. The level of optimism hit a 35-year high in February. A net [...]
The National Federation of Independent Business (NFIB) indicated that its Small Business Optimism Index stood at 104.8 for April, 104.7 in March and was fairly stable y/y. The level of optimism hit a 35-year high in February.
A net 30% of firms expected the economy to improve, down from February's 43% reading and below the 2017 average of 39%. Twenty-one percent of firms were expecting higher real sales versus 20% in March. A lessened 16% of businesses were planning to increase employment, the lowest figure since June. Meanwhile, an increased 50% indicated that there were few or no qualified candidates for job openings, the highest level since December.
Pricing pressure eased as a net 14% of firms were raising average selling prices, down from 16% in March. Twenty-two percent of firms were planning to raise prices, the least since December. A stable net 33% of firms increased worker compensation, but the figure was increased from 27% during all of last year. The share of businesses planning to raise compensation improved slightly to 21%, following declines in the prior two months from 24% in January.
Finding the financial resources to expand business remained relatively easy. A net five percent of businesses reported difficulties in obtaining credit, up from three percent during the first quarter and the highest since September.
This survey inquires about problems facing small business. The most pressing problem in April continued to be labor quality as 22% indicated a problem, up from four percent in 2010. Seven percent of firms reported the cost of labor as the most significant problem. Government requirements became much less worrisome at 13%, down from 22% in 2015. A still-low 18% indicated that taxes were the largest problem, though that was up from 13% in March. Competition from large businesses remained high at 10%, and insurance costs/availability worried a lessened 10%. Poor sales declined to an expansion low of 8% while financial & interest rates (2%) and inflation (1%) remained negligible.
Roughly 24 million small businesses exist in the U.S. and they create 80% of all new jobs. The index is based 1986=100. 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 (SA, Net % of Firms) | Apr | Mar | Feb | Apr'17 | 2017 | 2016 | 2015 |
|---|---|---|---|---|---|---|---|
| Small Business Optimism Index (1986=100) | 104.8 | 104.7 | 107.6 | 104.5 | 104.9 | 95.3 | 96.1 |
| Firms Expecting Economy to Improve | 30 | 32 | 43 | 38 | 39 | -5 | -5 |
| Firms Expecting Higher Real Sales | 21 | 20 | 28 | 20 | 23 | 5 | 8 |
| Firms Reporting Now Is a Good Time to Expand the Business | 27 | 28 | 32 | 24 | 23 | 10 | 12 |
| Firms Planning to Increase Employment | 16 | 20 | 18 | 16 | 18 | 11 | 12 |
| Firms With Few or No Qualified Applicants for Job Openings (%) | 50 | 47 | 47 | 48 | 49 | 46 | 46 |
| Firms Reporting That Credit Was Harder to Get | 5 | 4 | 3 | 4 | 4 | 5 | 4 |
| Firms Raising Average Selling Prices | 14 | 16 | 13 | 7 | 7 | 0 | 2 |
| Firms Raising Worker Compensation | 33 | 33 | 31 | 26 | 27 | 24 | 23 |
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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