Small Business Slightly Less Glum

Features Reuters

Small U.S. business owners are slightly less pessimistic about their outlook, and in the face of continuing weak sales do not plan to boost capital spending or employment, a monthly survey of small businesses showed.

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The National Federation of Independent Business' optimism index rose 3.8 points in April to 90.6, but the gain is not enough to signal that a solid recovery is in place, the association said Tuesday.

Nevertheless, the latest report showed the optimism index rising above 90 for the first time in months. The index was below 90 for 22 of the last 25 months, including 18 consecutive months prior to the April reading. Nine of the 10 index components were up compared with March.
Despite the index's rise, the survey showed that hiring by small businesses remains weak, with few saying they plan to create new jobs. Plans to make capital expenditures over the next few months were unchanged at 19 percent, the NFIB said.

It said small business owners continued to liquidate inventories and that weak sales gave little incentive to rebuild stocks.

The weak economy continued to put downward pressure on prices, with more business owners saying they plan to cut prices than those reporting plans to raise prices. It was the 17th consecutive month in which more businesses reported reducing prices than raising them, the association said.

"Reported capital spending remains at record low levels and plans to make outlays at historic lows," the survey concluded. "Looks like no money gets spent unless something breaks or the roof leaks."

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The index is based on 2,176 respondents in a random sampling of NFIB member firms through the end of April.

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