Confidence at U.S. Small Companies Increases for Fourth Month

Tuesday, 10 Jan 2012 09:04 AM

 

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Confidence among small businesses in the U.S. rose in December for a fourth month as companies foresaw improving sales, profits and economy, a survey found.

The National Federation of Independent Business’s index climbed to 93.8, the highest level since February, from 92 the previous month, the Washington-based group said today in a statement. The gauge averaged 88.2 in the recession that ended in June 2009.

Four consecutive gains mark the index’s longest stretch of increases since the same period ended November 2010. Alongside other improving data that include bigger payroll gains and stronger manufacturing, the small-business report indicates the economy is beginning 2012 on a bright note.

“The economy appears to be slowly recovering, resolving imbalances in debt, housing and the like,” William Dunkelberg, the group’s chief economist, said in a statement. “There is still a lot of work to be done.”

The share of owners projecting higher sales, adjusted for inflation, rose five points to 9 percent, also the highest since February. The gauge of expectations for better business conditions six months from now increased four points to a net minus 8 percent.

Hiring Plans

The net share of small-business owners planning to hire over the next three months slipped a point to 6 percent, the report showed. Nonetheless, workforce reductions were at the second-lowest level since December 2007, and the business group’s model projects an unemployment rate in the “mid to low 8 percent range” this year, according to the release.

The survey’s net figures are calculated by subtracting the percent of business owners giving a negative answer from those with a positive response and adjusting the results for seasonal variations.

A measure of earnings trends increased six points to a net minus 22 percent, the highest since December 2007, the report showed. Additionally, a net minus 9 percent of small businesses said they expect easier credit conditions, a one-point gain from the prior month.

Those businesses planning to spend on new equipment and facilities held at a 24 percent share, matching the highest level since March.

The NFIB report was based on responses from 725 small- business owners polled through Dec. 31. Small companies represent more than 99 percent of all U.S. employers, according to the U.S. Small Business Administration. A small business is defined as an independent enterprise employing as many as 500 people.

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