Small Business Optimism Still Below Its Level From A Year Ago

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Washington, Mar 13, 2012 | DJ Jordan, Wendy Knox (202-225-5821) | comments

House Small Business Committee Chairman Sam Graves (R-MO) today issued the following statement on the February National Federation of Independent Business (NFIB) Small Business Optimism Index. The monthly Small Business Optimism Index experienced a small increase, of .4 points, however, still remains below its level from a year ago. The NFIB report suggests that small business owners appeared more pessimistic about the outlook for economic conditions but more optimistic about future sales growth. The net percent of owners planning to create new jobs (in the next three months) fell 1 point to 4 percent, the third monthly decline.

“This NFIB Index report is a reminder that although economic data is starting to show some signs of growth, small business owners are still cautious about business conditions. Twenty-two percent of small business owners report ‘poor sales’ as their top business problem, and the net percent of owners planning to create new jobs in the next three months decreased again for the third straight month. As long as our nation’s most robust job creators feel this type of pessimism about our economy, we will not experience long-term, sustainable growth that will lead us to a full recovery.

“Last week’s House passage of the JOBS Act was a refreshing example of what Congress is capable of doing when it puts aside partisan bickering to pass legislation that will actually create a better environment for small business growth and job creation. I call on Senate Majority Leader Harry Reid to let the Senate vote on the bill as soon as possible and also consider the nearly 28 other House-passed jobs bills that await Senate consideration.” 

Highlights of The February NFIB Optimism Index Report:
• Job Creation: A vast improvement over January’s stalemate, the net change in employment per firm seasonally adjusted last month was 0.11. The increase from 0.0 is indicative of some real job creation. Seasonally adjusted, 12 percent of the owners added an average of 3.4 workers per firm over the past few months, and 14 percent reduced employment an average of 2.4 workers per firm. The remaining 74 percent of owners made no net change in employment. Forty-two percent of owners hired or tried to hire in the last three months and 32 percent of them reported few or no qualified applicants for positions. The ability to find qualified applicants for available jobs continues to be a problem for many small-business owners. The net percent of owners planning to create new jobs (in the next three months) fell 1 point to 4 percent (seasonally adjusted), the third monthly decline.

• Sales and Earnings: The net percent of owners expecting higher real sales gained 2 points to a net 12 percent of all owners (seasonally adjusted) but still 2 points below a year ago. The net percent of all owners (seasonally adjusted) reporting higher nominal sales over the past 3 months lost 1 point, falling to a net negative 7 percent, still more firms report sales trending down than up. Reports of positive earnings trends gained 5 points in February, rising to a net negative 19 percent. This is the best reading since October 2007. Profits are an important source of capital to grow small firms, so this improvement in profit trends is a welcome development.

• Capital Expenditures: Reports of capital spending continue to improve, although the percent of owners characterizing the current period as a good time to expand fell in February and remains historically low. The frequency of reported capital outlays over the past six months rose 2 points to 57 percent, building on the solid gain posted in December. Plans for future expenditures are a little bleaker, however. The percent of owners planning capital outlays in the next three to six months fell 1 point to 23 percent. Eight (8) percent characterized the current period as a good time to expand facilities (seasonally adjusted), down 1 point. The net percent of owners expecting better business conditions in six months was a negative six percent, down 3 points, and 15 percentage points lower than last year’s reading. Not seasonally adjusted, 17 percent expect deterioration (down 1 point), and 21 percent expect improvement (down 1 point).

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