If you’re looking for a job, small businesses are now more likely to hire.According to the National Federation of Independent Business’ Optimism Index, small business confidence rose 1.8 points (1.2 percent) in November to its most optimistic level since February.
The new confidence level still sits 8 points below where it was before the recession, and 14 points below where it was at during the onset of the 2001 recovery. But if you look at the line graph (which I’ll include in the post), the trend seems to be headed on an upward path away from its lowest point in early 2009, when confidence bottomed out at close to 80 points.
Small business optimism is now more than 10 points higher than it was in early 2009.
The survey analyzed the views of 781 small business owners, and specifically questioned them about their expectations for hiring, sales, investing, and other economic conditions.
The survey found that a seasonally-adjusted 7 percent of small business owners have made plans to hire more employees, which marked a 4 percent improvement over October, and the highest level of confidence in 38 months.
Current Employment Situation
As for the actual employment picture, small business owners reported an overall increase of 0.12 workers per firm in November. Thirteen percent of owners created new jobs, while 11 percent reduced their workforces. The other 76 percent of businesses made no employment changes. Sixteen percent (seasonally adjusted) are in the process of hiring but report it’s hard to fill job openings – up 2 points from October.
A fourth of small business owners continue to report “poor sales” as their biggest concern. An unadjusted 29 percent of them reported lower sales, while 21 percent reported higher sales. But this data was acquired before Black Friday and the record-setting Small Business Saturday – so it’s very likely to see much higher sales reported in next month’s survey.
The frequency of small businesses making new capital investments grew 1 point over the past six months to 53 percent, after hovering between 45 and 52 percent over the last 12 quarters. The percent of small businesses planning for new capital investments in the next three to six months also grew 3 points to 24 percent, its highest level in 40 months (but a level that was also reached in March). Only 8 percent (seasonally-adjusted) indicated that now is a good time to expand facilities, which was up 1 point from last month, and only 1 point below its best level over the past 38 months.
The amount of owners expecting better economic conditions in six months grew 4 points over October’s results, but still sat 22 percentage points below its level in January. In the most recent survey, 29 percent expect economic reduction and 12 percent expect economic improvement (both stats unadjusted for seasons).
What does it all mean?
The National Federation of Independent Businesses reported that the findings suggest the economy is slowly correcting itself. Many businesses are still working to write of the debt accrued from creating an excess supply of assets during the 2001-2007 bubble.
“The adjustment seems to be about over,” the NFIB indicated in its report. “Historically high percentages of owners reported inventories are in balance, reduced to match anemic consumer spending… Firms have stopped firing workers, employment has adjusted to weaker sales, but hiring new workers remains muted, as sales prospects offer little reason to hire workers.”
It must be noted that while this report was released on Dec. 13, it was created before Black Friday and Small Business Saturday, which NFIB said would be reflected in December’s survey.