Confidence Rises in Small Business Sector to End 2011
Posted in Retail on January 10th, 2012 by admin – Be the first to comment
Cited: MSNBC
Despite all the bad news for the economy in 2011, especially for the owner of small retail businesses, it seems that they were more upbeat about the prospects going forward to end the year. Confidence indexes in December for this key sector of the U.S. economy rose, marking four straight months of improving sentiments and a much more optimistic outlook for business conditions and real estate gains. The survey taken by the National Federation of Independent Business said that its Small Business Optimism Index rose 1.8 points in December to 93.8
The index is composed of 10 components and in the December survey, 8 of the 10 were either higher or unchanged. The majority of those surveyed saw improvements in business conditions and were less concerned about the economic outlook going out six months into the future according to an NFIB spokesperson.
While the outlook might be better, this is no time to break out the champagne. The NFIB index is still mired in recession territory, 6 points below the pre-recession average and more than 10 points below the same point in the recovery from the recession experienced in the U.S. economy in 2001. However, trends are very important when looking at these types of studies and so far, the trend is moving in the right direction, albeit at a slower pace and from much more depressed levels than most would like to see.
The sustained uptick in the index support the view that economic activity will support a growing U.S. economy into 2012, however, these gains aren’t forecast to be substantial unless this index rises much more sharply. The NFIB reported earlier this month that small businesses were still reducing payroll in December. The number of businesses that reported reductions in staff remained relatively low, but those hiring, though larger, could not offset the losses and this area of the economy remains at historically low levels for an economy that is just starting to dig its way out of a very large hole.
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My Take:
Any positive news about the economy is well-received, particularly as it applies to small businesses. As long as this momentum, slight as it may be, is sustained, then hopefully it will snowball into greater, more widespread economic activity leading to a reduction in the unemployment rate.
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