Small Business Optimism Declines for Eighteenth Consecutive Month

April 15, 2010
Despite other indicators that suggest the economy is beginning to rebound, the National Federation of Independent Business Index of Small Business Optimism has now posted an unprecedented 18 consecutive monthly readings below 90. Essentially, the results ...

Despite other indicators that suggest the economy is beginning to rebound, the National Federation of Independent Business Index of Small Business Optimism has now posted an unprecedented 18 consecutive monthly readings below 90.

Essentially, the results of the survey can be summed up by these two troublesome findings:


In March, the Index lost 1.2 points, falling to 86.8.



Nine of the 10 Index components fell or were unchanged from February's lackluster readings.


"The March reading is very low and headed in the wrong direction," says Bill Dunkelberg, NFIB chief economist. "Something isn't sitting well with small business owners. Poor sales and uncertainty continue to overwhelm any other good news about the economy."

On the bright side, the March numbers indicate that employment reductions seem to have stopped. But even so, plans to create new jobs remain weak. Over the next three months, 7 percent plan to reduce employment (down one point), and 15 percent plan to create new jobs (up two points), yielding a seasonally adjusted net negative 2 percent of owners planning to create new jobs that's weaker than February and suggests that still more firms planning to cut jobs than planning to add.

In addition, regular NFIB borrowers (35 percent accessing capital markets at least once a quarter) continued to report difficulties regarding credit. A net 15 percent reported loans harder to get than in their last attempt, up three points from February. However, 89 percent of the owners reported all their credit needs met or they did not want to borrow.

More details from the latest Index are available here.

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