The December NFIB Small Business Optimism report was released today, December 9, 2014. The headline of the Small Business Economic Trends report is “NFIB: Small Business Optimism Perks Up In December. ”
The Index of Small Business Optimism increased 2.0 points in November to 98.1.
Here are some excerpts from that I find particularly notable (but don’t necessarily agree with) :
The Small Business Optimism Index gained 2.0 points, taking the Index to its highest level since February 2007. The average of the Index from 1974Q4 to 2014 to date is 98, which includes all the Great Recession readings. What didn’t improve were the four “hard” Index components: job creation plans, plans for capital outlays, job openings and inventory investment plans, together adding a negative 1 percentage point to the Index. The entire gain in the Index was accounted for by two components: Expectations for Business Conditions in Six Months and Expectations for Real Sales Volumes, adding a combined 21 percentage points to net favorable responses, perhaps a response to the November election results.
The net percent of all owners (seasonally adjusted) reporting higher nominal sales in the past 3 months compared to the prior 3 months fell 1 point to a net negative 4 percent, a rather poor picture and inconsistent with the rise in optimism – bottom line, it is customers that bring joy and improve optimism. Twelve percent cited weak sales as their top business problem, one of the lowest readings since December, 2007, unchanged from October. Expected real sales volumes posted a 5 point gain, rising to a net 14 percent of owners expecting gains.
Four percent of the owners reported that all their credit needs were not met, holding at the historic low. Twenty-nine percent reported all credit needs met, and 54 percent explicitly said they did not want a loan. Only 3 percent reported that financing was their top business problem. Thirty-three percent of all owners reported borrowing on a regular basis, up 5 points and high compared to recent experience. The average rate paid on short maturity loans increased 10 basis points to 5.6 percent. The net percent of owners expecting credit conditions to ease in the coming months was a seasonally adjusted negative 6 percent; 1 point worse than October.
Here is a chart of the NFIB Small Business Optimism chart, as seen in the December 9 Doug Short post titled “Small Business Optimism – A Seven-Year High“ :
Further details regarding small business conditions can be seen in the full December 2014 NFIB Small Business Economic Trends report (pdf).
The Special Note summarizes my overall thoughts about our economic situation
SPX at 2039.20 as this post is written