Global| Feb 14 2017U.S. Small Business Optimism Improves
by:Tom Moeller
|in:Economy in Brief
Summary
The National Federation of Independent Business reported that its Small Business Optimism Index ticked 0.1% higher during January (12.8% y/y) to 105.9 following a 7.5% December surge. It was the strongest level of optimism since [...]
The National Federation of Independent Business reported that its Small Business Optimism Index ticked 0.1% higher during January (12.8% y/y) to 105.9 following a 7.5% December surge. It was the strongest level of optimism since December 2004.
Forty-eight percent of firms reported they were expecting the economy to improve, nearly the most since March 2002. Also 29% of firms expected higher real sales in six months, up from 1% in October. A stronger 25% of firms reported that now was a good time to expand the business, the most since December 2004.
On the labor front, a stronger 18% planned to increase employment. Potential employees seemed harder to come by as 47% of firms indicated they had few or no qualified candidates to fill job openings, up from 46% during all of 2015 and 2016. Hiring difficulty caused an increased 30% percent of firms to raise worker compensation, the most since February of 2007. A diminished 18%, however, of firms planned to raise compensation in the next three months.
A slightly lessened 27% of firms were planning to make capital outlays in the next 3-to-6 months. Two percent were planning to raise inventories, up from zero last year.
On the price inflation front, a still high 21% of businesses were planning to raise average selling prices. Five percent of firms actually raised average selling prices last month, versus none in 2016.
A stable 21% of firms indicated that taxes were the single most important problem and a steady 19% reported that government requirements were the largest single problem. A higher 15% felt challenged by the quality of labor, while a lessened 10% of firms indicated that poor sales were the largest single problem. A stable 8% of firms reported insurance cost & availability as the largest hurdle. A slightly reduced 8% reported competition from large businesses as the largest problem. A much higher 7% felt that cost of labor was their largest single problem. Inflation as the largest problem was indicated by a stable 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 %) | Jan | Dec | Nov | Jan'16 | 2016 | 2015 | 2014 |
|---|---|---|---|---|---|---|---|
| Small Business Optimism Index (1986=100) | 105.9 | 105.8 | 98.4 | 93.9 | 95.3 | 96.1 | 95.6 |
| Firms Expecting Economy To Improve | 48 | 50 | 12 | -21 | -5 | -5 | -5 |
| Firms Expecting Higher Real Sales | 29 | 31 | 11 | 3 | 5 | 8 | 11 |
| Firms Reporting Now is a Good Time To Expand the Business (% of Firms) | 25 | 23 | 11 | 10 | 10 | 12 | 10 |
| Firms Planning to Increase Employment | 18 | 16 | 15 | 11 | 11 | 12 | 10 |
| Firms With Few or No Qualified Applicants For Job Openings | 47 | 44 | 52 | 45 | 46 | 46 | 43 |
| Firms Reporting That Credit Was Harder To Get | 5 | 6 | 4 | 5 | 5 | 4 | 6 |
| Firms Raising Average Selling Prices | 5 | 6 | 5 | -4 | 0 | 2 | 8 |
| Firms Raising Worker Compensation | 30 | 26 | 21 | 27 | 24 | 23 | 21 |
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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