Tuesday, December 9, 2014

Small Business Optimism Rose to Pre-Recession Level

The NFIB Small Business Optimism Index leaped 2 points to 98.1 in November, the highest level since February 2007. The Index increase was mainly due to gains in Expectations for Business Conditions in Six Months (16 points) and Expectations for Real Sales Volumes (5 points). However, Expected Credit Conditions, Plans to Increase Inventories and Plans to Make Capital Outlays declined one point each, and Plans to Increase Employment moved up just one point.

The NFIB noted that the improvement in expectations for the next 6 months and expectations for higher sales was likely due to the results of the midterm elections in the beginning of November. When asked if now is a good time to expand substantially, 5% fewer respondents said “no”, and of those saying “no” the percent who blamed the political climate fell 9 percentage points to 19%, the lowest reading since January 2012.

Although GDP growth in the second and third quarters has been strong, the type of growth contributing to GDP—increase in exports and building inventories—has not helped small businesses.

Taxes took the top spot as the single most important problem for small businesses, followed closely by government regulation and red tape. Financing and interest rates remains the least cited concern, although it edged up to 3% of respondents from 2% in the previous month.

Read the NFIB report.

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