Small businesses are finally starting to see some signs of improvement though improvement is tepid. This month’s small business survey from the NFIB showed improvement in most categories:
“The National Federation of Independent Business Index of Small Business Optimism rose 1.5 points in November rising to 93.2, the highest reading since December 2007, and the fourth consecutive monthly gain. The bad news: 93.2 is, from an historical perspective, still a recession-level reading (the average was about 100 before the recession started). The last time the Index was this low (prior to 2008) was in 1993. The recovery in the Index continues to underperform all recovery periods since 1973, the start of the NFIB surveys.
“The Index is trending up, but at a very slow pace,” said Bill Dunkelberg, NFIB’s chief economist.”
“Overall, job creation is likely to continue but at a tepid pace,” said Dunkelberg.
“Apparently the future is looking brighter for more owners, although much will depend on what Congress does in the closing weeks of the year,” said Dunkelberg.
The net percent of all owners (seasonally adjusted) reporting higher nominal sales over the past three months worsened by two points to a net-negative 15 percent, 19 points better than March 2009, but still indicative of very weak customer activity.
Fourteen percent of the owners (unchanged) reported raising average selling prices, and 20 percent reported average price reductions (down 2 points). Seasonally adjusted, the net percent of owners raising prices was a net negative 4 percent, a one point increase from October. Still, November is the 24th consecutive month in which more owners reported cutting average selling prices that raising them, a condition that might support concerns about deflation now worrying the Federal Reserve.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.
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