Saturday, December 20, 2014

Small-business optimism index rises in April

The monthly measure of plans and actions by the owners of companies firms is still weak, but researchers see the weakness stoking "pent-up demand."

Small-business optimism index rises in April

Small businesses showed signs of stirring in April.

The NFIB Research Foundation’s Index of Small Business Optimism rose for the first time in four months. It bumped up 5.8 points to 86.8, but the reading is well below the peak of 105.8 reached during the third quarter of 2004.

Yes, employment was down. So were capital spending, inventories and sales. But the researchers behind the index, led by Temple University economics professor William C. Dunkelberg, see the low levels as setting the stage for a bounce back.

Follow their logic. The slashing of employment levels has been “unprecedented” and “likely overdone.” Double-digit percentages of owners have cut inventory over 13 straight quarters. And while owners continue to defer spending on projects that are not critical to the survival of their businesses, that can only go on for so long.

“Eventually, you have to fix the roof, replace equipment. The trucks don’t work anymore,” Dunkelberg said.

Small businesses didn’t suffer the hard stop last fall that paralyzed the financial sector. But they are reporting more frequent difficulties in arranging financing, reflecting the reality that it’s always harder to borrow during a recession than an expansion.

The optimism, or pessimism, of small business owners is worth paying attention to because they employ so many people. The Small Business Administration says that small firms have created 60 percent to 80 percent of the net new jobs since the mid-1990s.

Winner is …

The winner of the SIFE USA National Exposition held in Philadelphia earlier this week was Flagler College.

SIFE, which I wrote about on Tuesday, is the program where students on college campuses apply the business concepts they’ve been studying to solve real-world community problems.

Students at the Florida school developed a program to teach success skills and financial literacy to Nepalese refugees in the United States. They also created an ethics training video for the 9,000 employees and franchise owners of Winmark Corp., which runs retail chains that sell used merchandise, such as Play It Again Sports.

Mike Armstrong Inquirer Columnist
About this blog
Mike Armstrong blogs about Philadelphia corporations and business-related topics. Contact him at 215-854-2980. Reach Mike at marmstrong@phillynews.com.

Mike Armstrong Inquirer Columnist
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