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Economy in Brief

U.S. Small Business Optimism Improves Slightly
by Tom Moeller  May 10, 2016

The National Federation of Independent Business reported that its Small Business Optimism Index increased 1.1% during April to 93.6 following declines in three of the four prior months.

An improved 8% of firms reported that now was a good time to expand the business, but expectations for the overall economy remained dour. One percent of firms expected higher real sales in six months, roughly the lowest in five months.

Employment prospects brightened slightly. Eleven percent of firms expected to increase employment, the most in three months; however, a higher 46% of respondents found few or no qualified candidates to fill job openings, up from March's 41% low. A sharply increased 29% of firms had positions they were not able to fill right now. A greater 24% of firms raised worker compensation over the last twelve months, but a lessened 15% were expecting to raise it in the next three months.

Small businesses' pricing ability improved as a lessened 1% of firms were lowering prices. Expectations about the future ability to raise prices, however, eased as a fewer 16% of firms were planning to raise them.

Credit remained slightly more difficult to get as 5% reported trouble, up from 3% at the low. A stable 31% of firms felt satisfied that their borrowing needs had been filled in the last three months.

A lessened 21% of firms indicated that taxes were the single most important problem and a reduced 20% reported government requirements were the largest single problem. A stable 12% felt challenged by the quality of labor. A reduced 11% of firms indicated that poor sales were the largest single problem. An increased 10% reported insurance cost & availability as the largest problem. A stable 8% reported competition from large businesses as the largest problem, and a fairly stable 6% reported the cost of labor was the biggest problem. Inflation was indicated by a steady 2% of respondents.

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 (SA, Net %) Apr Mar Feb Apr'15 2015 2014 2013
Small Business Optimism Index (1986=100) 93.6 92.6 92.9 96.5 96.1 95.6 92.4
Firms Reporting Now is a Good Time To Expand the Business 8 6 8 11 11 10 7
Firms Expecting Higher Real Sales In Six Months 1 1 0 9 8 11 4
Firms Expecting Economy To Improve -18 -17 -21 -5 -5 -5 -15
Firms Planning to Increase Employment 11 9 10 11 12 10 6
Firms With Few or No Qualified Applicants For Job Openings 46 41 42 44 46 43 39
Firms Reporting That Credit Was Harder To Get 5 5 5 4 4 6 6
Firms Raising Average Selling Prices -1 -4 -4 1 2 8 2
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