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Economy in Brief

U.S. Small Business Optimism Improves
by Tom Moeller  July 12, 2016

The National Federation of Independent Business reported that its Small Business Optimism Index increased 0.7% during June to 94.5 following an unrevised 0.2% May rise.

An improved -9% of firms were expecting the economy to improve, the best reading since October, and a slightly increased 2% were expecting higher real sales in six months. Twenty six percent were planning to raise capital expenditures. To the downside was the percentage reporting that now was a good time to expand the business.

Employment prospects dimmed slightly. Eleven percent of firms expected to increase employment, down slightly m/m. A steady 48% of respondents found few or no qualified candidates to fill job openings, equaling the most since September 2007. An increased 29% of firms had positions they were not able to fill right now, equaling the most of the economic expansion. A lessened 22% of firms raised worker compensation over the last twelve months, and a diminished 14% were expecting to raise it in the next three months.

Small businesses' pricing ability improved as 2% of firms were raising prices, the most since November. Expectations about the future ability to raise prices remained unchanged.

Credit was slightly harder to get as 5% reported trouble, the least in six months. An increased 32% of firms felt satisfied that their borrowing needs had been filled in the last three months.

A stable 23% of firms indicated that taxes were the single most important problem, the most since last June. A slightly increased 19% reported that government requirements were the largest single problem. A lessened 11% of firms indicated that poor sales were the largest single problem, but a higher 15% felt challenged by the quality of labor. A lessened 7% reported insurance cost & availability as the largest hurdle, and an increased nine percent reported competition from large businesses as the largest problem. A slightly higher six percent reported the cost of labor was the biggest problem. Inflation was indicated by 2% of respondents as the largest problem, matching the least since November.

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 %) Jun May Apr Jun'15 2015 2014 2013
Small Business Optimism Index (1986=100) 94.5 93.8 93.6 94.6 96.1 95.6 92.4
Firms Reporting Now is a Good Time To Expand the Business 8 9 8 10 11 10 7
Firms Expecting Higher Real Sales In Six Months 2 1 1 5 8 11 4
Firms Expecting Economy To Improve -9 -13 -18 -8 -5 -5 -15
Firms Planning to Increase Employment 11 12 11 9 12 10 6
Firms With Few or No Qualified Applicants For Job Openings 48 48 46 44 46 43 39
Firms Reporting That Credit Was Harder To Get 5 4 5 4 4 6 6
Firms Raising Average Selling Prices 2 1 -1 2 2 8 2
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