Bill Dunkelberg, NFIB:
November 2011 - Small-Business Confidence Rises - Third Consecutive
Month
December 13, 2011
Is Hope for the Economy on the
Horizon?
Small-business
optimism rose for the third consecutive month, gaining 1.8 points in
November, and settling at a still weak 92.0, according to the National
Federation of Independent Business’ (NFIB’s) latest index. The majority
of index components (8 of 10) improved or did not change from the
previous reading; the most notable increases posted in expectations for
real sales gains and the outlook for business conditions. Optimism
appears to have climbed because fewer owners expect business conditions
or sales to be worse in six months, indicating some hope on the horizon.
Improvement, although small, was widespread with the forward-looking
components indicating positive trends for the first time in many months.
“After so many months of pessimism, November’s modest gain made it feel
like spring, again,” said NFIB Chief Economist Bill Dunkelberg. “We have
good reason to be optimistic about last month’s report and hopeful about
what it means for the future. Still, our current reality is still very
much the ongoing economic winter. November’s reading is still well below
the average reading prior to 2008 levels from previous recoveries. More
acutely, it is 2 points below January’s index, which means that there
has been no progress over the calendar year. We should be encouraged,
but cautiously so.”
According the November’s survey, the
percent of owners reporting “poor sales” as the top problem remained
stubbornly high at 25 percent followed by 19 percent reporting both
taxes and regulations. Inflation remained unchanged at six percent and
interest rates fell 1 point to three percent as owners’ top problem.
Some other highlights of November’s
Optimism Index include:
Sales
reports improved in November, albeit marginally, and still remaining
negative overall, rising to a net negative 11 percent, with more firms
reporting sales trending down than up. As in previous months, a full
quarter of owners indicated “poor sales” is their top business problem.
Unadjusted, 21 percent of all owners reported higher sales (last three
months compared to prior three months, down 1 point) while 29 percent
reported lower sales (down 1 point). Most of the reports on sales volume
were made before “Black Friday”; the impact of that level of spending
will show up in the December reports on sales. The net percent of owners
expecting higher real sales gained 8 points to a net 4 percent of all
owners (seasonally adjusted), but still 9 points below January 2011’s
reading.
The net percent of owners
expecting better business conditions in six months was a negative 12
percent, 4 points better than October, but still 22 percentage points
below January’s reading. Not seasonally adjusted, 29 percent expect
deterioration, 12 percent expect improvement. A net four percent of all
owners expect improved real sales volumes, a huge 8 point gain over
October.
The employment picture brightened
last month, ending five months of decline. In November, NFIB owners
reported an overall increase in employment of 0.12 workers per firm in
November. Seasonally adjusted, 13 percent of the owners added, while 11
percent reduced employment. The remaining 76 percent of owners made no
net change in employment. Forty-seven percent of owners hired or tried
to hire and 35 percent of them reported few or no qualified applicants
for positions. Sixteen percent (seasonally adjusted) reported hard to
fill job openings, up 2 points from the previous month.
Future hiring plans were also
positive. Over the next three months, a seasonally adjusted net seven
percent of owners plan to create new jobs—a 4 point improvement from
October and the strongest reading in 38 months. Historically, during an
expansion plans to hire should be in in the double digit levels.
The frequency of reported capital
outlays over the past six months rose 1 point to 53 percent, the second
monthly increase in succession after languishing between 45 and 52
percent for the last 12 quarters. The percent of owners planning capital
outlays in the next three to six months rose 3 points to 24 percent, the
highest reading in 40 months (also reached in March this year). Money is
available, but most owners are not interested in a loan to finance the
purchase of equipment they cannot use. Only eight percent characterized
the current period as a good time to expand facilities (seasonally
adjusted), up 1 point and only 1 point below the best reading in the
past 38 months.
Today’s report is based on the
responses of 781 randomly sampled small businesses in NFIB’s membership,
surveyed throughout the month of November.
