Small Business Optimism Rises

Small Business Owners Became Increasingly Optimistic

Small Business Optimism RisesA new study from the National Federation of Independent Business (NFIB) shows that small business owners became increasingly optimistic in July. The NFIB’s Small Business Optimism Index edged higher last month, increasing by 0.7 points to reach a reading of 95.7. This jump at the beginning of the 2014 third quarter followed a decline in the small business optimism index in June.

Six of the index’s 10 components increased, with a big gain in the share of firms saying it was a good time to expand. There was modest growth in the number of firms increasing inventories, making capital investments, and creating new jobs. Businesses also told NFIB researchers that they expect easier credit conditions in the future. There were, however, declines in the share of firms expecting higher sales growth in the coming months.

In the release of its report, the NFIB provided a measured look at small businesses optimism today. “On the positive side, expectations for business conditions and outlook for expansion accounted for virtually all of the net gains in July’s index,” said Bill Dunkelberg, NFIB’s chief economist. “However, capital spending reports continue to remain mediocre, spending plans are weak, and inventories are too large.”

The NFIB report follows Counselor’s release earlier this week of the ad specialty industry’s second-quarter sales survey. It showed that distributors increased their revenues by 6.1% in the period, which was the 18th consecutive quarterly gain for distributors. Also, the study showed that the Counselor Confidence Index, a measure of distributors’ outlooks on their business conditions, hit 113 in the second quarter, which was just shy of the all-time high reached in the first quarter and well above the baseline that indicates industry growth.

NFIB’s survey, which is based on responses from 1,645 of the organization’s members, also noted that small businesses have been able to increase prices recently. A quarter of respondents said they increased their average selling price within the past three months, and 23% said they plan on raising prices in the next three months, one of the highest readings since 2008.