Small Business Optimism Stuck in ‘Recession Levels’

The closely watched optimism index of a national organization of small businesses rose just 0.1 point in January, settling at 93.9.
The Index remains below its level a year ago of 94.1.
“Historically, optimism remains at recession levels,” the National Federation of Independent Business said today in a statement.
The slight increase in the NFIB index marks five consecutive months of improvement, but the readings from January and February 2011 were actually higher – indicating no actual gain for the calendar year.
Small business owners appeared less pessimistic in January about business conditions and sales growth, but there was no net gain in hiring or plans for increased inventories.
“The most positive statement that can be made about January’s reading is that the Index did not go down; a change of 0.1 points is essentially no change and it is hardly indicative of a surge in economic activity,” said NFIB Chief Economist Bill Dunkelberg. “Nothing happened last month that would significantly improve the small business outlook; Washington is at a stalemate.
January 2012’s survey indicates that the economy will continue to crawl along at a slow and weak pace, NFIB said.
The organization reports that job growth improved 0.15 from December, but only to a “net zero” new workers per firm.
On a seasonally adjusted basis, 11 percent of owners added an average of three workers per firm over the past few months, while 11 percent reduced employment an average of 2.9 workers per firm.
The remaining 78 percent of owners made no net change in employment.  Business owners reporting reductions in employment remained relatively low, suggesting that firms are through cyclically adjusting their employment.
The frequency of firms that reported making capital expenditures over the past six months lost one point, declining to 55 percent – still retaining a solid gain posted in December.
On a positive note, 4 percent of owners reported financing as their top business problem, while 9 percent said that not all of their credit needs were satisfied. The record low is 4 percent in this category, reached in 2000.
Thirty percent of all owners reported borrowing on a regular basis, down 1 point and only 2 points above the record low. A net 11 percent reported loans “harder to get,” compared to their last attempt (asked of regular borrowers only), up 1 point.

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