Indexes: Small business owners more upbeat

Small business owners are more optimistic, but not yet as upbeat as they were before the recession, according to the latest results of separate measures tracking their outlook.

The National Federation of Independent Business reported that its Small Business Optimism Index rose 1.8 points to 95.2 in April. The reading is the first above 95 since 2007, but remains below the average reading of 100 for the index between 1973 and 2008.

The Wells Fargo/Gallup Small Business Index climbed to 47 for the second quarter. The reading is up two points from the first quarter and at the highest level in six years, but also remains below pre-recession levels.

“Small business confidence rising is always a good thing. But it’s tough to be excited about meager growth in an otherwise tepid economy,” said Bill Dunkelberg, chief economist the NFIB.

Lisa Stevens, a regional banking president for Wells Fargo, reiterated that assessment. “The trend of business owners feeling more confident each quarter is a positive sign. Yet, the level of improvement we see today remains small, and we’re less than halfway between he lowest point in our survey’s 10 year-history and the highest level of business owner sentiment reached in 2006.”

The NFIB bases its index on the results of monthly surveys of members of the small business advocacy group. For April, seven of 10 components of the index advanced, two retreated and one remained unchanged.

 The proportion of owners responding to the survey upon which the April index was based who expect the economy to improve jumped nine points, yet remained at a net negative 9 percent. A net  25 percent of owners said they expect to make capital outlays, up a point. A net 8 percent of owners said now as a good time to expand, unchanged from last month. A net 3 percent of owners reported plans to increase inventories, up two points.

The share of owners who said they plan to increase staffing rose three points to a net 8 percent. A net 24 percent of owners said they had hard-to-fill job openings, up two points.

The proportion of owners who expect increased sales fell two points to a net 10 percent. Reports of positive earnings trends rose four points, but remained at a net negative 20 percent.

The Wells Fargo/Gallup Small Business Index is based on telephone interviews with 600 business owners across the country. The overall index is based on the answers to a total of 12 questions about present conditions and expectations for the coming year. Readings above 0 indicate business owners responding to the surveys are, as a group, more optimistic than pessimistic. Over the past 10 years, the index has ranged from 114 in the fourth quarter of 2006 to a negative 28 in the third quarter of 2010.

For the second quarter, both the overall score of 47 and a future expectations score of 33 moved to their highest levels since 2008.

While 28 percent of business owners said they expect to increase capital spending over the coming year, 23 percent said they plan to decrease spending. The share of owners who expect credit to be difficult to obtain over the next year fell to 26 percent, the lowest level since the third quarter of 2008.

The Business Times has served as the definitive source for Grand Junction business news since 1994. The journal offers news, views and advice you can use twice each month in print with daily updates online at www.TheBusinessTimes.com
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Posted by on May 13 2014. Filed under Business News. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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