Small Business Owner Optimism Moved Higher in April

By May 14, 2013Economy, General

The National Federation of Independent Business (NFIB) reported that small business owner sentiment moved higher last month. The Small Business Optimism Index rose from 89.5 in March to 92.1 in April, its highest level in six months. As you might expect, an improved sales outlook helped to lift these figures, with the net percentage of respondents expecting higher sales increasing from -4 percent to +4 percent. In addition, small businesses appear to be more willing to increase hiring, as well, with the net percentage planning to hire in the next three months rising from zero in March to 6 percent in April.

This does not mean, however, that small businesses have moved beyond their challenges. Keep in mind that small businesses are said to be growing strongly when the Optimism Index exceeds 100, so we are still quite a way from that. Indeed, the net percentage of business owners saying that the next three months were a “good time to expand” was unchanged at four percent. As with past reports, the top reasons cited for it not being a good time to expand were economic uncertainties and the political climate.

Small business capital spending plans were marginally lower, from 25 percent to 23 percent of respondents intending to make an expenditure in the next 3 to 6 months. While lower, the average for the first four months of 2013 (23.5 percent) is higher than the average for 2012 (22.2 percent), indicating a slight pickup in investment activity in 2013.  Similarly, the availability of loans appears to show gradual improvements from last year and the years following the financial crisis.

The “single most important problem” cited in this month’s report was taxes, mentioned by 23 percent of those completing the survey. This is almost certainly a reference to the higher marginal tax rates this year resulting from the fiscal cliff deal. It had the same percentage last month. The other top concerns were government regulations (21 percent) and poor sales (16 percent).

Chad Moutray is the chief economist, National Association of Manufacturers.

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM), where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

Leave a Reply