August 15 , 2014
U.S. small business optimism up slightly
U.S. – July’s 'National Federation of Independent Business (NFIB) Optimism Index’ technically rose 0.7 points to a reading of 95.7. There was little change in the 10 index components other than outlook for expansion and business conditions which accounted for the small gain in the index. Even though these improved, they still remain historically low.
“On the positive side expectations for business conditions and outlook for expansion accounted for virtually all of the net gain in July’s index,” says NFIB chief economist Bill Dunkelberg.
“However, capital spending reports continue to remain mediocre, spending plans are weak, and inventories are too large, with more owners reporting sales trends deteriorating than improving. As long as these stats continue to hold, the small business half of the economy will continue to not be able to pull its weight.”
Selected July indicators:
Sales. The net per cent of all owners (seasonally adjusted) reporting higher nominal sales in the past three months compared to the prior three months fell one point to a net negative three per cent, still one of the very best readings since 2007. Thirteen per cent cited weak sales as their top business problem, one of the lowest readings since December, 2007, the peak of the expansion. Expected real sales volumes posted a one point decline, falling to a net 10 per cent of owners expecting gains.
Credit Markets. Six per cent of the owners reported that all their credit needs were not met, unchanged and only two points above the record low. Thirty per cent reported all credit needs met, and 52 per cent explicitly said they did not want a loan. Only two per cent reported that financing was their top business problem compared to 22 per cent citing taxes, 22 per cent citing regulations and red tape and 13 per cent citing weak sales.
The net per cent of owners expecting credit conditions to ease in the coming months was a seasonally adjusted negative five per cent; more owners expect that it will be “harder” to arrange financing than easier (a two point improvement). This is the most favorable reading about credit market conditions since 2006, occurring at a time when the Fed is terminating its aggressive QE3 policy.
To read the full NFIB press release, click here.