The Economy

Small Business Optimism Up

But solid economic growth likely to be elusive this year, says NFIB chief economist William Dunkelberg.
Katie Kuehner-HebertMay 12, 2015
Small Business Optimism Up

The National Federation of Independent Business Tuesday said that its Small Business Optimism Index rose 1.7 points from March to 96.9, “a decent month-over-month reading but overall still below the historical average.”

“Overall, the index remains steady, but it is still a few points below the average and is showing no tendency to break out into a stronger pattern of economic growth,” NFIB Chief Economist Bill Dunkelberg said on the organization’s website.

“The little economic growth we do see is coming mostly from small businesses. Solid economic growth would require good performance from both big and small firms and that will likely be elusive this year.”

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Small businesses posted another “decent month” of job creation, the NFIB said. Those that hired were more aggressive than those reducing employment, producing an average increase of 0.14 workers per firm, continuing a string of solid readings for 2015.

Just over half (53%) reported hiring or trying to hire (up 3 percentage points), but 44% reported few or no qualified applicants for the positions they were trying to fill; 13% reported using temporary workers, up 3 percentage points; 27% of all owners reported job openings they could not fill in the current period, up 3 percentage points from March; and a net 11% plan to create new jobs, up 1 percentage point.

“Job growth certainly hit a major speed bump,” Dunkelberg said. “Weather, sure, but not in major GDP states like Texas, Florida, and California. The plunge in oil prices certainly adversely impacted job growth in the shale states. The West Coast dock strike? Maybe. But hard to figure out how many jobs might have been lost due to delays, certainly temporary losses that will be recovered when the goods flow.”

Eight other NFIB index components rose last month, with the exception of sales.

Jim O’Sullivan, chief U.S. economist at High Frequency Economics told Reuters that the NFIB survey results conveyed “a fairly positive tone … The data add to the evidence that the weakening in growth in first quarter was largely due to ‘transitory’ factors,” O’Sullivan said.

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