Small-Business Optimism Index Increases in November

Politics Dow Jones Newswires

Confidence among small-business owners moved up last month above its long-run average, according to a report released Tuesday. The gain could reflect optimism related to the coming change in Congressional leadership.

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The National Federation of Independent Business's small-business optimism index increased a large 2.0 points to 98.1 in November. That puts the index a hair above its average of 98.0 from 1974 to 2014.

Economists surveyed by The Wall Street Journal expected the index to rise to 96.5 in November from 96.1 in October.

The NFIB downplayed the large increase of its own index saying two subindexes accounted for the increase.

The subindex covering real sales expectations increased 5 percentage points to 14% last month. The subindex covering business conditions expectations jumped 16 points to 13%.

These subindexes cover what small business owners think will happen in the future and the NFIB said the gains are "perhaps a response to the November election results." Republicans won enough seats to take control of the House and Senate next year.

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"What didn't improve were the four 'hard' index components: job creation plans, plans for capital outlays, job openings and inventory investment plans," the report said.

According to the survey results, the job creation subindex edged up 1 percentage point to 11% in November, the capital-spending plans subindex dropped 1 point to 25%.

The subindex covering jobs that are difficult to fill held at 24%, and the inventory subindex fell 1 point to 2%.

Hiring over the past three months was slightly positive. The seasonally adjusted average increase in workers per firm was 0.05 workers a firm, up from 0 in October. According to the NFIB, 12% of firms reported increasing employment an average of 3.6 workers while 10% reduced their workforce by an average of 3.3 workers.

Of those looking for workers, 85% said they were seeing few or no applicants who were qualified for the open positions.

Another trend that is working against small businesses, said the NFIB, was the lack pf pricing power. Seasonally adjusted, a net 4% of owners have raised selling prices recently, half the percentage saying they raised prices in October.