Global| Nov 08 2005Small Business Optimism Up, Pricing Intentions Cool
by:Tom Moeller
|in:Economy in Brief
Summary
The index of small business optimism from the National Federation of Independent Business (NFIB) jumped 3.7% in October, despite the devastation wreaked by three Hurricanes. The economic outlook brightened as 14% of firms expected the [...]
The index of small business optimism from the National Federation of Independent Business (NFIB) jumped 3.7% in October, despite the devastation wreaked by three Hurricanes.
The economic outlook brightened as 14% of firms expected the economy to improve, the best reading since June, although the percentage remained well below the 34-37% range from 2002 to 2004. Plans for adding to employment held steady at 17%, the same as during the last three months. On the negative side, the percentage of firms planning to raise capital expenditures fell back to the lowest level of the year.
During the last ten years there has been a 70% correlation between the level of the NFIB index and the two quarter change in real GDP.
The percentage of firms planning to raise average selling prices fell to 23% from 27% during the prior two months and from 26% during all of last year. The percentage of firm actually raising prices also dipped to 22% from 25% in September but those readings remained up versus 19% averaged in 2004. During the last ten years there has been a 60% correlation between the change in the producer price index and the level of the NFIB price index.
The percentage of firms with one or more job openings fell two points to 21%, last year's average. During the last ten years there has been a 67% correlation between hiring plans and the three month growth in nonfarm payrolls.
About 24 million businesses exist in the United States. Small business creates 80% of all new jobs in America.
The latest press release from the NFIB is available here.
| Nat'l Federation of Independent Business | Oct | Sept | Y/Y | 2004 | 2003 | 2002 |
|---|---|---|---|---|---|---|
| Small Business Optimism Index (1986=100) | 103.7 | 100.0 | -0.2% | 104.6 | 101.3 | 101.2 |
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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