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Survey: Small-Business Optimism Gains 2 Points in April; CAPEX Plans Increased

May 08, 2012, 06:30 AM
Filed Under: Economy

According to the National Federation of Independent Business, the Index of Small Business Optimism gained 2 points in April, settling at 94.5 after taking a dip in March. The reading is the highest since December 2007, however, April’s gain only returns the Index to its February 2011 level, indicating that in a year, the net gain has been zero. While March did not post strong job creation numbers, labor market indicators did improve, suggesting better job growth in the next few months.

“While the Index remains historically weak, there was good news in the details of April’s report. Job creation plans, job openings and capital spending plans all increased. Hopefully, this performance will hold in the coming months,” said NFIB Chief Economist Bill Dunkelberg. “However, GDP and employment growth news has not been good; the Euro debt crisis continues to make news and Congress leaves us on an identical path: huge deficits, a terrifying amount of liquidity at the Fed, and no indication that anything positive will be done. Most likely, there will be only small improvements on Main Street in optimism or hiring and spending this year. With the election six months away, the Index will signal how small firm owners see the economy’s future unfolding—and their outlook will be telling.”

Among the owners surveyed, most remain very satisfied with current inventory holdings. However, owners indicated that they do not plan on adding, consistent with a small deterioration in their expectations for real sales gains in the coming months. The percent of owners reporting positive sales trends quarter on quarter reached the highest level seen since April 2006. This was a major contributing factor to the huge improvement in reported profit trends, an 11 point gain and equal to half the improvement of the Index.

The report is based on the responses of 1,817 randomly sampled small businesses in NFIB’s membership, surveyed throughout the month of April.

Read the full National Federation of Independent Business press release.

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