"Economists are pessimists: they've predicted 8 of the last 3 depressions."
--Barry Asmus

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Tuesday, March 8, 2011

NFIB Small Business Optimism Index

This is the National Federation of Independent Business' Small Business Optimism Index, a survey of NFIB members on topics including employment, capital spending,  inventories, credit conditions, sales, and economic expectations.  This is not considered to be a major market mover, since small businesses are rarely listed companies.  This is not to say that small businesses are unimportant to the economy, however.  According to the US Small Business Administration, small businesses:
  • Represent 99.7% of all employer firms
  • Employ just over half of all private sector employees
  • Pay 44% of total US private payroll
  • Have generated 64% of net new jobs over the past 15 years
  • Create more than half of the nonfarm private gross domestic product (GDP)
So, even though this report may not be directly a major market mover, small businesses have a significant impact on the overall economy of the US.
According to the NFIB, the overall optimism index gained 0.4 in February, rising to 94.5.  15% of respondents reported unfilled job openings (up 2 points from January) - something that could indicate that unemployment will drop[1].    17% (up 5 points from January) of respondents plan to increase employment over the next three months, while only 6% (down 2 points) plan to cut jobs.
[1]  Unfilled job openings can be an indicator that there are more jobs than potential employees.

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