Small Business Optimism Creeps Up from Historic Lows

Small business ownersHas the outlook for small businesses turned the corner? Possibly.
The Optimism Index from the National Federation of Independent Business gained 3.8 points in April to 90.6 – ending seven straight quarters of below-90 readings.
Some key index components, such as employment, sales and capital spending, are coming off historic negatives for the NFIB’s 35-year-old index. And more than 91 percent of owners said their credit needs were met, or they did not want to borrow.
However, employment measures barely moved and capital expenditure plans were flat.
“The gains are a step in the right direction, but they are not enough to signal a solid recovery is in place,” said William Dunkelberg, NFIB chief economist.  “Owners are feeling a little better about things, but not enough to turn them into concrete action.”
The organization said the average employment per firm surveyed was “negative 0.18” in April. Since July 2008, employment has fallen each quarter.
Over the next three months, 7 percent plan to reduce employment (unchanged) and 14 percent plan to create new jobs (down 1 point). That’s a net-negative 1 percent of owners planning to create new jobs, a point higher than March, “but still very weak,” the NFIB said.
Capital outlays over the past six months rose one point to 46 percent of all firms in April, two points above the 35-year record low from December 2009.
“Plans to make capital expenditures over the next few months were unchanged at 19 percent, 3 points above the 35-year record low,” NFIB said.
Over the past three months, the percentage of business owners reporting higher nominal sales improved “10 points to a net-negative 15 percent, still negative, but a huge improvement,” the NFIB said.
The survey was conducted through April 30 and reached 2,197 small business owners.

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