Small Business Optimism Continues To Rise

Small business optimism is on the rise, according to a survey of 725 small businesses by the National Federation of Independent Business (NFIB).

The NFIB small-business optimism index rose 1.8 points to 93.8 in December, continuing a four month upward trend and indicating the upward momentum may continue into 2012. However, even with the increases, NFIB points out the index's readings are still in "recession territory."

Several positive factors emerged in the December survey, including a 6 point increase in reports of positive earnings and a 2 point increase of those reporting higher profits. Still, fourth quarter sales did not meet expectations, only gaining 4 points to a net negative 7 percent, which indicated that there are still more businesses with decreasing than increasing sales. In the survey, 23 percent of owners indicated that weak sales was their top business problem.

However, future sales expectations are looking up. Nine percent of owners, up 5 points since November, predict higher real sales for their business. Twenty-five percent expect to see improvements in the next three months. "Much of December’s gain resulted from the fact that concerns about business conditions over the next six months have subsided and because many small-business owners have improved their expectations for real sales gains in the coming months," NFIB chief economist Bill Dunkelberg said in a statement.

Capital continues to be less and less of a concern for business owners, according to the NFIB, with only 4 percent citing issues with access to credit. Ninety-three percent of owners said all their credit needs were met or were not interested in borrowing. Only 31 percent of owners reported borrowing on a regular basis, down 3 points in December. Fewer owners are struggling to get loans as well.

Dunkelberg cautioned, "The economy appears to be slowly recovering, resolving imbalances in debt, housing and the like. But, it is unlikely that growth will be much better than 2011 even with a solid fourth quarter GDP growth. There is still a lot of work to be done."