NFIB: Small business optimism begins 2014 ‘slightly up’ from December

Small-business optimism started the year at 94.1, which is “slightly up” from December but “well below” the pre-recession average of 100. 

 

That’s according to the National Federation of Independent Business’ (NFIB’s) latest index of small-business optimism released today.

 

Owners indicated optimism about their sales expectations, rising 7 percentage points from December to 15 percent, which the NFIB called “huge” in a news release.  Respondents also indicated the “strongest” job-creation plans since 2007, the organization said.

 

However, small-business owners continue finding inventories “too high” and sales and earnings trends continued to “deteriorate” for more owners, the NFIB said.

 

Overall, the index is still “just treading water,” the federation said.

 

Employment starts 2014 over “a million below” its peak in January 2008 and prospects for a major recovery in jobs are “not good,” William (Bill) Dunkelberg, chief economist at NFIB, said in the news release.

 

“NFIB labor-market indicators have recently seen a return to normal (but not expansion) levels, [which is] encouraging in that reversals are now less likely.  The average increase in workers per firm has also risen in recent quarters, indicating new job creation.  However, there are far fewer firms hiring workers than there were in 2007 and many of those still in existence have downsized,” Dunkelberg said.

 

The NFIB’s monthly optimism index examines several indicators, including job creation.

 

NFIB owners increased employment by an average of 0.12 workers per firm in January (seasonally adjusted), representing half the December reading, but a “solid” number, the NFIB said. 

 

Seasonally adjusted, 13 percent of the owners reported adding an average of 3.7 workers per firm over the past few months, a figure that fell 1 point from December, according to the Index. 

 

Offsetting that number, 11 percent of NFIB owners reduced employment (up 1 point) an average of 3.3 workers, which is up 1 percentage point from December.  The combination of the two components produced the seasonally adjusted net gain of 0.12 workers per firm overall.

 

The remaining 76 percent of owners made no net change in employment. 

 

At the same time, 46 percent of the owners hired or tried to hire in the last three months. Of that number, 38 percent (which represents 83 percent of those trying to hire or hiring) reported few or no qualified applicants for open positions, the NFIB said.

 

Contact Reinhardt at ereinhardt@cnybj.com