Economic Watch: Small Business Optimism Running High
The National Federation Independent Business says its Small Business Optimism Index for February rose 0.1 points to 98, registering a solid result despite some unfavorable conditions, according to a report released Tuesday morning.
Evan Lockridge・Former Business Contributing Editor
March 10, 2015
Graphic: NFIB
2 min to read
Graphic: NFIB
The National Federation Independent Business says its Small Business Optimism Index for February rose 0.1 points to 98, registering a solid result despite some unfavorable conditions, according to a report released Tuesday morning.
This latest reading is the third highest since early 2007, eclipsed only by November and December 2014.
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“In spite of slow economic activity and awful weather in a lot of the country, small business owners are finding reasons to hire and spend which is great news,” said Bill Dunkelberg, NFIB chief economist.
Of the ten components, owners reporting hard-to-fill job openings was the largest gain increasing three points to a 29%, which is a nine year high.
“Large firms have been powering the economic recovery since the Great Recession, but that may be shifting to the small business sector,” he said. “February’s data suggests there are fundamental domestic economic currents leading business owners to add workers and these should bubble up in the official statistics and support stronger growth in domestic output.”
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According to Dunkelberg, historically the small business sector produces about half the private GDP and employs half of the private sector workforce.
“During the recovery, this sector did not pull its historic weight, slowing the recovery in employment substantially,” he said. “In the [previous economic] boom, not only were too many houses built but too many firms were started, and filled with inventories to satisfy consumer spending…Huge numbers of firms and their jobs were lost in the recession, nearly 900,000 establishments in each of the years 2008 and 2009. The NFIB data suggest that the surviving firms are regaining stride and the Bureau of Labor Statistics data now show more starts than terminations, supporting job growth.”
Dunkelberg said independent business owners are finding reasons to hire even though the “macro” indicators are not showing a lot of growth.
“There are fundamental domestic economic currents leading owners to add workers and these should bubble up in the official statistics and support stronger growth in domestic output,” he said.
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