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Economy in Brief

U.S. Small Businesses Optimism Nudges Higher
by Tom Moeller  February 11, 2014

The National Federation of Independent Business reported that its Small Business Optimism Index improved to 94.1 during January from 93.9 in December. The latest figure remained down slightly from the May high of 94.4. For all of last year the sentiment index rose to 92.4, its highest level since 2007.

An improved 15% of firms expected higher real sales in six months, the highest level of the economic recovery. The percentage of firms expecting the economy to improve, however, remained unchanged and near the center of the last three year's range. Suggesting that labor market conditions remained tight, 22 percent of firms had positions they were not able to fill, nearly the most since before the recession. A sharply increased 12% were planning to increase employment, the most of the economic recovery. A lessened 38% of firms found few or no qualified applicants for job openings, the least since May. Twenty four percent of firms were planning capital expenditures in the next 3-6 months, still near the most of the economic recovery.

A steady 19% planned to raise average selling prices in the future but a slightly improved were raising them now. A diminished 11% planned to increase worker compensation, off its recent high of 14%.

The most important problems faced by small business were taxes (a recovery high of 24%), government requirements (22%), poor sales (a recovery low of 14%), insurance cost & availability (8%), quality of labor (8%), 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 Jan Dec Nov Jan'13 2013 2012 2011
Small Business Optimism Index (SA, 1986=100) 94.1 93.9 92.5 88.9 92.4 92.2 91.4
Firms Expecting Higher Real Sales In Six Months (Net %) 15 8 3 -1 4 2 3
Firms Expecting Economy To Improve (Net %) -11 -11 -20 -30 -15 -9 -9
Firms Planning to Increase Employment (Net %) 12 8 9 3 6 4 3
Firms With Few or No Qualified Applicants For Job Openings (Net %) 38 38 44 34 39 35 32
Firms Reporting That Credit Was Harder To Get (Net %) 6 7 6 7 6 8 10
Firms Raising Avg. Selling Prices (Net %) 2 -1 2 2 2 4 5
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