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National Federation of Independent Business Optimism Survey

Posted by Joseph Trevisani on Feb 12, 2013 2:25:00 PM

Confidence among small business owners, the most important economic segment for job creation, improved marginally in January, but remained well below its historical average.

The National Federation of Independent Business‘s (NFIB) Small-Business Optimism Index rose 0.9 points to 88.9 in January, its second monthly gain in a row. The post-recession high has been 94.5 twice, in February 2011 and April 2012.  The 20 year monthly average is 97.7. 

“The Optimism Index barely budged in January. The only good news is that it ‘budged’ up, not down", said Bill Dunkelberg NFIB chief economist. "While corporate profits are at record levels as a share of GDP, small businesses are still struggling to turn a profit.  With the dismal news that our economy actually contracted in the fourth quarter of 2012, it isn’t any wonder that more small firms expect their real sales volumes to fall, few have plans to invest in new inventory, and hardly any owners are expanding or hiring."

Indices for profits, sales expectations, general business conditions and credit conditions rose but were still in negative territory which indicates that a greater percentage of replies to the question whether this is a good time to expand were negative rather than positive.

The profit index climbed to -26 from -29 in December, its highest reading since the same in October. It is up from the recent -32 low in November but is still more than twice as negative as last April's post-recession high of -12. The 20 year average is -23.2.

Sales expectations rose 1 to -1 in December, also an improvement from the recent low in November of -5 but well south of last February's reading of 12, the post-recession high of 14 in February 2011 or the 20 year average of 12.

General business conditions gained 5 to -30 and credit conditions rose 2 to -9 in January.

Responses to plans for capital spending, hiring and the number of job opening were both stronger and positive and that for business expansion fell but stayed positive.

The capital spending index climbed 1 to 21; hiring plans rose 2 to 3 and credit conditions eased 2 higher to -9. The measure of buisness expansion fell 2 to 6.

The post-recession high for the hiring index was 10 last August. The 20 year average is 10.7. Job openings rose 2 to 18 in January, its two decade average is 21.5.

Joseph Trevisani

Chief Market Strategist


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Charts: Bloomberg


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