Small Business

Small Biz Confidence Continues Upward Trend

Patricia Orsini|Small Business Editor
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For the fourth time since September, and for the second month in a row, small-business optimism has risen, according to the National Federation of Independent Business Optimism Index.

It was another small, but positive, sign that small business is feeling more confident about the economy.

But it comes with a caveat, one Bill Dunkelberg, NFIB chief economist is quick to point out. “Similar gains in the early part of 2011 quickly faded, and the Index is still well below where it should be at this point in the recovery.”

The Index, which surveys small business owners monthly regarding employment, sales, credit conditions and more, stands at 93.8 for December. That number is up 1.8 points from November, and 5.7 points since September 2011.

The economy seems to be slowly recovering, as housing stabilizes and personal debt declines. But, “there is still a lot of work to be done,” he said in a statement.

Dunkelberg’s pessimistic outlook about the Optimism Survey is based on his reading of the factors used to determine small business owners’ confidence in the economy.

Among the findings of the survey:

• 6 percent of owners plan to create new jobs, a 1-point decline from November, but the second-highest reading since September 2008.

• Sales are still down for many businesses; while those reporting higher sales over the past three months gained four points, overall, the Index is in negative territory. 23 percent of owners reported “weak sales” as a top business problem.

• Frequency of capital outlays has gone up for the third time in as many months; still, many business owners are hesitant to borrow unless they absolutely need to make improvements.

The survey, which is based on the responses from 725 small businesses during the month of December, measures 10 components, including plans to increase employment, plans to make capital outlays, expectations of economy to improve, expectations of real sales to be higher, current inventory, and whether now is a good time to expand.