NFIB Small Business Optimism Index Edges Up in November
by:Sandy Batten
|in:Economy in Brief
Summary
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Small increase in December but index still remains well below long-term average.
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Inflation remains top business concern.
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Expectations of improved conditions over the next six months increased but remained deeply negative.
The National Federation of Independent Business's Small Business Optimism Index edged up 0.6 point to 91.9 in the November, still markedly below the index's 49-year average of 98. Inflation continued to be the major problem for small business owners although the percentage noting inflation as the major problem slipped to 32% in November from 37% in October, which was the highest reading since the fourth quarter of 1979. Small businesses continued to have a rather pessimistic outlook. While the net percentage expecting better business conditions over the next six months rose a modest three points, the net -43% reading for December was still consistent historically with the economy being in an economic recession.
Although inflation continues to be a major problem, inflation pressures have receded recently as compared with earlier this year. The net percent raising their selling price was 51% in December, up one point from November, but down significantly from the recent high of 66% in March. The net percent expecting to increase prices in the next three months was unchanged at 34% in December, also down meaningfully from the recent high of 52% in March.
Labor markets remain tight with 54% of respondents reporting few or no qualified applicants in December, down only one point from November and only seven points from the May high of 61%. Similarly, 44% reported positions not able to be filled in December, down two points from November but down only seven points from the recent high of 51% in May. In contrast to the overall pessimistic economic outlook, neither of these labor-market figures is consistent with the economy being in a recession.
Sales expectations continued to improve in December but remained very low. A net -8% expect higher sales over the next three months. Although this reading is still very weak, it was up from -13 in November and a recent low of -29 in July.
These data are in Haver's SURVEYS database.
Sandy Batten
AuthorMore in Author Profile »Sandy Batten has more than 30 years of experience analyzing industrial economies and financial markets and a wide range of experience across the financial services sector, government, and academia. Before joining Haver Analytics, Sandy was a Vice President and Senior Economist at Citibank; Senior Credit Market Analyst at CDC Investment Management, Managing Director at Bear Stearns, and Executive Director at JPMorgan. In 2008, Sandy was named the most accurate US forecaster by the National Association for Business Economics. He is a member of the New York Forecasters Club, NABE, and the American Economic Association. Prior to his time in the financial services sector, Sandy was a Research Officer at the Federal Reserve Bank of St. Louis, Senior Staff Economist on the President’s Council of Economic Advisors, Deputy Assistant Secretary for Economic Policy at the US Treasury, and Economist at the International Monetary Fund. Sandy has taught economics at St. Louis University, Denison University, and Muskingun College. He has published numerous peer-reviewed articles in a wide range of academic publications. He has a B.A. in economics from the University of Richmond and a M.A. and Ph.D. in economics from The Ohio State University.
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