by Calculated Risk on 11/09/2010 08:14:00 AM

From National Federation of Independent Business (NFIB): Small Business Optimism improves slightly

Optimism rose again in October, but the index remains stuck in the recession zone established over the past two years, not a good reading even with a 2.7 point improvement over September. This is still a recession level reading based on Index values since 1973. However, job creation plans did turn positive and job reductions ceased.

Note: Small businesses have a larger percentage of real estate and retail related companies than the overall economy.

Click on graph for larger image in new window.

The first graph shows the small business optimism index since 1986. Although the index increased to 91.7 in October (highest since May), it is still at recessionary level according to NFIB Chief Economist Bill Dunkelberg.

The second graph shows the net hiring plans over the next three months.

Hiring plans have turned slightly positive again. According to NFIB: "Average employment growth per firm was 0 in October, one of the best performances in years. ... Over the next three months, eight percent plan to increase employment (unchanged), and 13 percent plan to reduce their workforce (down three points), yielding a seasonally adjusted net one percent of owners planning to create new jobs, a four point gain from September."

And the third graph shows the percent of small businesses saying "poor sales" is their biggest problem.

Usually small business owners complain about taxes and regulations (that usually means business is good!), but now their self reported biggest problem is lack of demand.