A measure of small business confidence rose last month to its highest level since October 2006, sending a “strong signal” that U.S. small businesses could finally be shaking off the Great Recession, according to the National Federation of Independent Business.
The federation’s Small Business Optimism Index rose 2.3 points to 100.4 in December, returning to its pre-recession average. Eight of the 10 Index components advanced, one was unchanged and one declined by just 1 percentage point. Most of the index’s gains in November, by comparison, were confined to just two categories.
“The December Index shows much broader strength led by a significant increase in the number of owners who expect higher sales,” Bill Dunkelberg, the NFIB’s chief economist, said in a news release. “This could be a breakout for small business.”
“There’s no question that small business owners are feeling better about the economy, he added. “If they continue to feel that way 2015 could be a very good year.”
The net percentage of all small business owners (seasonally adjusted) reporting higher nominal sales in the past three months was up 6 points compared to the prior 3 months, rising to a net 2%. Eleven percent of respondents cited weak sales as their top business problem, one of the lowest levels since December 2007.
“Consumers really did start to show up, the best thing that can happen to a small business owner,” the NFIB noted.
Significantly more respondents also told the federation last month that now is a good time to expand, a sentiment that until recently had not been very common. Sixty percent reported capital outlays, up 3 points from November and the strongest reading since December 2007.
On the labor side, 54% reported hiring or trying to hire, but 43% reported few or no qualified applicants for the positions they were trying to fill.
The recovery of Main Street could “provide a good base for stronger economic growth,” the NFIB said, while adding that Congress must still address problems facing small business owners including health insurance costs, uncertainty about economic policy, energy costs, the cost of regulations and the tax code.
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