Small businesses finally seeing lift from 'macro' economic gains
Small business is back. The National Federation of Independent Business’s Small Business Optimism Index is at 7-year high, a sign business owners are feeling good about economic conditions. The report is just the latest pointing to the growing strength in the overall U.S. economy.
The index jumped 2 points to 98.1 in November, a tick above its average of 98.0 between 1974 to 2014. It’s the highest reading since February, 2007. The gain is being pegged to expectations that business conditions over the next six months will continue to improve and sales will grow in strength.
“This is very good news,” says Yahoo Finance Editor in Chief, Aaron Task. “This is sort of the last leg of the recovery.” Economists surveyed by The Wall Street Journal expected a much smaller increase for the index, projecting a rise to 96.5.
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While stocks have soared and GDP and employment figures have returned to pre-recession highs, small business has lagged in the recovery. But that's changing. Small businesses added more than 100,000 jobs to their payrolls last month, accounting for almost half of the total gains in the private sector.
Task says that is a good sign heading into the New Year. "[If] you think, ‘Wow, six months from now I am going to continue to grow,’ then you’re much more l likely to hire.”
But the NFIB isn’t bringing out the party hats and balloons just yet. “It’s a little early to declare a breakout,” says Bill Dunkelberg, Chief Economist for the National Federation of Independent Business in the report. “This performance will have to be consolidated by several more positive readings before owners are confident to hire more employees and expand their business,” he says. “But it’s a good sign that comes at a good time for small business.”
Taxes and regulation are at the top of the list of concerns for small business owners, according to the NFIB. Poor sales, quality of labor and competition from large businesses were other leading worries for business owners.
“The thing with small business owners is they worry about everything,” says Task. “You’ve got to tip your hat because it’s a very tough thing to do for anyone to start a business and be successful at it,” says Task. “It is a very good sign for the rest of us that they are starting to feel more optimistic.”
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