Economic Spin: Highs, Lows of Small Business Optimism Index

Depending on which spin doctor prescribes your news, the National Federation of Independent Business’s  (NFIB), May Small Business Optimism Index is cause for celebration or little more than political fool’s gold.

amante by mimschi, on Flickr

amante by mimschi, on Flickr

In fact, the index indicates that among the 18 percent respondents of the 3,938  businesses surveyed, optimism in the near-term for small business is on the rise (for the second consecutive month).  In fact, the index is at its second highest point since the recession began. And in fact, it is mired in four-year historic lows as measured since 1986, the first year the NFIB began its monthly assessment of small business outlook.

Specifically, the Small Business Confidence Index increased 2.3 points to a 94.4 last month, the highest level since May last year.  The Index measures ten sentiments among small businesses: eight of the ten advanced in the most recent tally.  Expected capital investment and job-creation plans remained the flat and declined respectively.

The report reflects anticipated sales growth in the coming six months; historically actual sales have shadowed, but rarely met, the index’s anticipated curve. Similar results will almost certainly curtail the expected increase in earnings the current report reflects, leaving little available funding for capital or employment investment, duly portended in the May report.

It concludes, “The small business half of GDP is clearly not participating much beyond growth generated by population gains.  More businesses are being formed than lost, so there is some boost to job creation there, but too many existing firms have not yet started to replace the workers shed during the recession.

“The Optimism Index is…higher now (than its record low in 2009), good news, but well below-pre-2008 averages and the peak for the expansion, bad news.  Until this sector gets in gear, it will be hard to generate meaningful economic growth.”

We want to know what you think. As a small business, do you expect your business to grow in  the next six months? Where do you expect to see noticeable changes in the health of your business for the balance of 2013?

Image Copyright NFIB Small Business Trends, June 2013

Image Copyright NFIB Small Business Trends, June 2013

Speak Your Mind

*