Small business optimism levels improve
According to the National Federation of Independent Business (NFIB), its small business optimism index rose 2.6 points in April, making up for the drop in optimism in March of 1.3 points. Although still at a negative 15 percent, small businesses are feeling better about the potential for the economy to improve.
Six indices were unchanged, and the NFIB reports a decline in business’ plans to make capital outlays and a decrease in optimism levels regarding future credit conditions, both of which are important indicators of growth and will be closely monitored.
Job creation levels have failed to improve in the last twelve months, and 18 percent of businesses surveyed maintain that they have open job positions that they cannot fill with qualified candidates. Taxes and government regulations remain the top concern of small businesses, up substantially from even just one year ago.
Four key components of the NFIB report point to improving optimism levels, namely plans to increase employment (up six percent), plans to increase inventories (up five percent), and spiking for the month, expectations for the economy to recover rose 13 percent while expectations that sales will improve in the future rose four percent.
NFIB explains why optimism levels are shifting
“Small-business confidence saw an uptick this last month, but it was a ho hum, yawn, at-least-it-didn’t-go-down reading. The sub-par recovery persists for the small business sector,” said NFIB chief economist Bill Dunkelberg.
Dunkelberg continued, “Economic performance is contradictory—corporate profits are at record levels and the stock market hits new highs, yet GDP growth for the past six months has averaged about 1.5 percent and the unemployment rate is 7.5 percent. Nothing in the NFIB data suggests that the small business half of the economy is expanding other than by an amount driven by population growth and associated new business starts now in excess of terminations.”
The NFIB continues to point to The Hill, as Dunkelberg notes that “The lack of leadership in Washington and the resulting uncertainty depresses consumers’ and business owners’ willingness to spend and invest, and make bets on the future.”
