US small business optimism shows slight gain in August

11 September 2012 17:22  [Source: ICIS news]

WASHINGTON (ICIS)--US small business owners reported a slight improvement in August in their outlook for the nation’s economy, although overall expectations remain very low, a trade group said on Tuesday.

The National Federation of Independent Business (NFIB) said that its small business optimism index gained 1.7 points in August from July, rising to 92.9.

The small business index combines results from NFIB’s monthly survey of members on ten questions, such as whether they plan to hire more workers, make capital investments or expect the economy to improve.

In the August survey, the number of small businesses that planned to increase employment in the near future rose by 5 points. But that gain means that a net 10% of small firms expect to do any hiring in the near future.

Small businesses – which are generally defined as those with 500 or fewer employees – also reported a three-point gain in plans to make capital outlays, meaning that 24% of those surveyed expect to spend more on their plants or equipment.

There was a five-point pickup in expectations for higher sales, but that only raised the overall measure from July’s negative reading to a mere 1% of positive outlook.

While there was a six-point improvement in the number of small businesses that expect the US economy to improve in the near term, that gain means that those expectations are still at a negative 2%.

There were also one- or two-point declines in the number of small firms that expect credit conditions to improve, that earnings will improve or that this is a good time to expand their businesses.

NFIB chief economist William Dunkelberg said that the small gain in small business optimism last month may reflect political expectations rather than economic outlook.

“Nothing happened in August to really improve their outlook,” Dunkelberg said of the small businesses cited in the survey, noting that August’s “economic news was uninspiring and mixed”.

NFIB last week noted that hiring among its small business members fell slightly in August.

Instead, Dunkelberg said, “it is possible that the uptick in their spirits will forecast the election outcome and the chance for a favourable resolution of our fiscal dilemma”.

“But for now,” he added, “expect little change in the current course of the economy.”

The NFIB represents some 350,000 US small businesses.

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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