A leading indicator of business optimism edged up in December, new research shows.
The National Federal of Independent Businesses’ Research Foundation disclosed this finding in a January 2013 report, “NFIB Small Business Economic Trends.” The study is based on data collected from 648 FNIB members via a mailed questionnaire.
NFIB’s Optimism Index gained half a point, rising to 88.0, the second-lowest reading since March 2010. This is better than the 81 low reading during the 2007-2009 recession, but not characteristic of a recovery, the report concludes.
“Were it not for population growth supporting consumption and net new small business creation, we would have no growth at all,” the report states.
The small business owners surveyed reported a tiny increase in job creation, adding an average of 0.03 workers per firm, better than November’s -0.04 reading, but both roughly “0”. For the entire sample, 11 percent of the owners (up 1 point) reported adding an average of 2.9 workers per firm in recent months, and 13 percent reduced employment (up 2 points) an average of 1.9 workers (seasonally adjusted).
The pace of inventory reduction continued, with a net negative 10 percent of all owners reporting growth in inventories (seasonally adjusted), unchanged from November, the report states. A net 0 percent (up 2 points) reported stocks too low, historically a high level of satisfaction with stocks. But with dismal sales expectations, plans to add to inventories remained weak at a net negative 4 percent of all firms (seasonally adjusted), only 1 point better than November.
The net percent of all owners (seasonally adjusted) reporting higher nominal sales over the past 3 months improved 5 points to a negative 10 percent, a step in the right direction, but a small one. The low for this cycle was a net negative 34 percent (July 2009) reporting quarter over quarter gains, the report states.
Nineteen (19) percent still cite weak sales as their top business problem, historically high, but down from the record 34 percent reading last reached in March 2010. The net percent of owners expecting higher real sales volumes rose 3 points to a negative 2 percent of all owners (seasonally adjusted), 14 points below the 2012 high of net 12 percent reached in February.
Not seasonally adjusted, 20 percent expect improvement over the next 3 months (up 1 point) and 40 percent expect declines (down 3 points), the report adds.