Small Biz Confidence Hits Six-Year High
Small Business Optimism Index At 96.6
Owners of small companies are the most optimistic they’ve been since September of 2007, according to the latest survey from the National Federation of Independent Business (NFIB). The group’s Small Business Optimism Index rose for the third straight month, jumping 1.4 points in May, for a final reading of 96.6 – the best number since before the Great Recession.
The NFIB survey found that May was the eighth month in a row that small-business owners increased employment, the longest period of gains since 2006. Payrolls grew by a seasonally-adjusted average of 0.11 workers last month. Plans for job creation rose 2% to a seasonally-adjusted net 10%, a figure that is approaching what the NFIB regards as a normal level for a growing economy.
Small-business owners also reported positive news regarding sales. The net percentage of business owners reporting nominal sales in the past quarter improved 1 point to a net -1%, compared with lows of -34% in 2009. Plus, 15% of owners expect real sales to improve, the best reading since 2007. Of course, as the NFIB points out, sales expectations don’t necessarily translate into stronger demand for inventories or employees.
Throughout 2014, advertising specialty firms have echoed the positive sentiment expressed in the overall U.S. economy. For the first quarter, the Counselor Confidence Index – which measures industry health – reached 114, a record number. Optimism was strong across all groups, including small businesses. “The economy does seem to be improving at a moderate pace,” said Andy Shuman of Rockland Embroidery (asi/734150). “Our industry appears to be even more bullish.”
There are still economic data points of concern, though, according to the NFIB. The four components of the survey related to GDP and employment growth – job openings, job creation plans, inventory and capital spending plans – actually fell a point last month, according to a statement released Tuesday by Bill Dunkelberg, chief economist for the NFIB. “The entire gain in optimism was driven by soft components, such as expectations about sales and business conditions,” he said.
The May NFIB Small Business Optimism Index is based on survey responses of 678 small businesses in the NFIB’s membership. Surveys were conducted throughout that month.