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Index: Small-business optimism inches upward

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Though small-business owners continue to cite weak sales as their top business problem, optimism rose slightly in January, according to the latest National Federation of Independent Business Index of Small Business Optimism.

The index rose 1.5 points last month to 94.1, but optimism may have been blunted by small-business owners’ skepticism abut the future and continued hesitancy to spend and hire, according to a Feb. 8 news release.

“Manufacturing and exporting are leading the recovery – industries and activities that are not labor intensive – while construction, an industry historically dominated by small firms, remains depressed,” NFIB Chief Economist Bill Dunkelberg said in the release.   

After reaching 0 in October and November, job creation turned negative in December and deteriorated further in January, with  average employment change of -.15 employees among firms surveyed for the index. The average increase in employment has been negative in 33 of the last 37 months, the release said. While new firms will add jobs, existing firms accounted for the bulk of jobs during the recession, with 13 percent of firms represented in the index reporting unfilled job openings. Another 8 percent indicated plans to reduce staffing levels.

“While the economy is moving forward, albeit at a snail’s pace, it is not nearly fast enough to dramatically improve the unemployment situation, which continues to languish,” Dunkelberg said.

The index also found that the frequency of reported capital outlays in the last six months rose 4 points to 51 percent of all firms, but that increase is historically low and is far less than is needed after years of recession and depreciation. The index shows that many owners remain
in maintenance mode and aren’t willing to risk new capital investments.

A possible bright spot, however is that the net percentage of owners who expect higher sales continued to rise, up 5 points to a net 13 percent, a 16-point gain since September on a seasonally adjusted basis.

Also, 92 percent of small-business owners represented in the index reported that all their credit needs were met, or they were not interested in borrowing.

NFIB is a nationwide organization founded in 1943 to represent the interests of its small-business members in the state and federal governments. The January index was based on responses of 2,144 randomly sampled small businesses among NFIB’s membership, the release said.[[In-content Ad]]


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