Tuesday, May 08, 2012

NFIB: Small Business Optimism Index increases in April

by Bill McBride on 5/08/2012 08:06:00 AM

From the National Federation of Independent Business (NFIB): Small-Business Optimism Gains Two Points in April

After taking a dip in March, the Index of Small Business Optimism gained 2 points in April, settling at 94.5. The reading is the highest since December 2007, however, April’s gain only returns the Index to its February 2011 level, indicating that in a year, the net gain has been zero. While March did not post strong job creation numbers, labor market indicators did improve, suggesting better job growth in the next few months.
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“While the Index remains historically weak, there was good news in the details of April’s report. Job creation plans, job openings and capital spending plans all increased. Hopefully, this performance will hold in the coming months,” said NFIB Chief Economist Bill Dunkelberg.
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The percent of owners reporting positive sales trends quarter on quarter reached the highest level seen since April 2006.
Note: Small businesses have a larger percentage of real estate and retail related companies than the overall economy.

Small Business Optimism Index Click on graph for larger image.

This graph shows the small business optimism index since 1986. The index increased to 94.5 in April from 92.5 in March. This ties February 2011 as the highest level since December 2007.

Another positive sign is that the "single most important problem" was not "poor sales" in April - for the first time in years. In the best of times, small business owners complain about taxes and regulations, and that is starting to happen again.

This index remains low, but as housing continues to recover, I expect this index to increase (there is a high concentration of real estate related companies in this index).

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