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Small Business Optimism Index Remains Extremely Low

Washington, November 8, 2011 -

Small Business Optimism Index Remains Extremely Low

Chairman Graves: “The House has passed 22 bipartisan bills that would help improve the issues that small businesses are pessimistic about, but the Senate won’t bring them up for a vote”

WASHINGTON— House Small Business Committee Chairman Sam Graves (R-MO) today issued the following statement on the October NFIB Small Business Optimism Index.  The monthly Small-Business Optimism Index experienced a small uptick, of 1.3 points, from the previous month but was still weighed down by a dominant negative forecast.  

“On Friday, we learned that only 80,000 jobs were created in October while the unemployment rate experienced its 33rd consecutive month where unemployment exceeded eight percent. Businesses simply are not hiring because they are pessimistic about consumer sales, the nation’s economic climate, and the amount of regulations to comply with.

“The House has passed 22 bipartisan bills that would help improve the issues that small businesses are pessimistic about, but the Senate won’t bring them up for a vote. We’ve passed bills that reduce unnecessary regulations, increase access to capital, increase energy production jobs, and improve the nation’s economic climate by addressing our debt. However, these bills do no good if the Democrat-controlled Senate won’t bring them up for a vote because they’re more concerned about politics than working together to create jobs.

“Even though NFIB’s Optimism Index experienced a slight uptick, the overall mood of the nation’s job creators is still at historic lows.  The survey shows that over the next three months, only 9 percent of small business owners plan to increase employment, down from the previous month, and 12 percent plan to layoff workers. These numbers are actually worse than the previous two months.

“America’s small businesses create seven of every ten new jobs and they employ just over half of the country’s private sector workforce. Washington can provide an environment for this type of growth by instituting more policies that bring about long-term certainty. The House has done just that throughout this year. It’s time for the Democrat-controlled Senate to follow our lead.”

Highlights Of The October NFIB Optimism Index Report:
Over the next three months, 9 percent plan to increase employment (down 2 points), and 12 percent plan to reduce their workforce (unchanged) yielding a seasonally adjusted net of 3 percent of owners planning to create new jobs, down a point from September and 2 points below August, the strongest reading for 2011 to date.  NFIB owners reported an overall reduction in employment for the 5th month in a row, posting an average reduction of 0.1 workers per firm in the October survey.  Fourteen percent (seasonally adjusted) reported hard to fill job openings (unchanged).

• Sales remain a major problem for small firms—26 percent of the owners indicated, “poor sales” is their top business problem, apparent in the frequency of reported weaker sales trend. Unadjusted, 22 percent of all owners reported higher sales (down 3 points) while 30 percent reported lower sales (up 1 point).  This is not a level of economic activity that will support job creation.

• The net percent of owners expecting better business conditions in six months was a negative 16 percent, 6 points better than September, but still 26 points worse than January. The net percent of owners (seasonally adjusted) reporting higher sales over the past 3 months lost 2 points, falling to a net negative 12 percent, more firms with sales trending down than up. The net percent of owners expecting higher sales gained 2 points to a seasonally adjusted net negative 4 percent, 17 points below January’s reading.  This is bad news for hiring and inventory investment.
• The frequency of reported capital outlays over the past six months rose 2 points to 52 percent. The record low of 44 percent was reached in August 2010.  Of those making expenditures, 36 percent reported spending on new equipment (up 1 point), 18 percent acquired vehicles (up 1 point), and 13 percent improved or expanded facilities (unchanged). Five percent acquired new buildings or land for expansion (down 1 percent) and 11 percent spent money for new fixtures and furniture (up 2 points).  These numbers have not changed all year, “range bound” around current levels.

• Four percent of owners reported financing as their most important business problem.  So, for the overwhelming majority, credit availability is not a significant problem. Ninety-one percent reported that all their credit needs were met or that they were not interested in borrowing.  Nine percent reported that not all of their credit needs were satisfied, the record low is 4 percent reached in 2000.