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Home > BizTimes Daily > Archives > June 8, 2009
NFIB survey shows small business optimism
Published June 8, 2009 - BizTimes Daily
Small business owner optimism continues to improve. The National Federation of Independent Business Index of Small Business Optimism rose 2.1 points in May.
Added to April's gain of 5.8 points, the Index has clearly bottomed (the March reading of 81.0 was less than a point away from the all-time low reading of 80.1 reached in the second quarter of 1980) and is signaling an end to the recession, according to the NFIB.
Nine of the 10 Index components were unchanged or up in May.
Gains were posted in the number of small business owners expecting the economy to improve and in the number expecting improved sales, increased inventories and increased capital outlays.
"It does appear that the decline in spending for inventory and capital projects has bottomed and will turn up in the coming months," said NFIB chief economist William Dunkelberg. "Plans to order more inventory are 10 percentage points higher than March's low reading, and plans to make capital expenditures are four points above March readings."
Still, the improved optimism has not yet translated into increased job creation. Thirty-eight percent of the owners hired or tried to hire in the past few months, 11 points lower than last year’s peak.
"This would fit the lagging indicator characterization of the employment numbers," Dunkelberg said, "Although if job reduction was overdone, that lag should be shorter this time around. It is encouraging that a major factor pushing the unemployment rate up was a surge in new job seekers rather than layoffs and job losses."
Small business owners are signaling a bottom to the recession. Both expectations and planned spending are on the rise. Profit trends are still very negative (43 percentage points more reported falling earnings that rising), due as much too widespread price cutting as to weak sales trends. With consumer sentiment on the rise as well, sales will increase in the coming months, the NFIB said.
"The biggest concern on the minds of owners is the weakness in spending which has now started to turn up as consumers become less concerned with proclamations of pending disaster for the economy - it’s not going to happen," Dunkelberg said.
