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On Small Business
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Posted at 09:19 AM ET, 02/14/2012

Small business optimism edges up, still trails 2011 levels

On the bright side, small business confidence didn’t decline last month. But it certainly didn’t improve much, either.

The National Federation of Independent Business’ small business optimism index inched up by the smallest of margins – just 0.1 point – in January, marking the fifth consecutive month of improvement and settling the index at 93.9. However, the index remains at recession levels and continues to lag in year-over-year comparisons.

“Nothing happened last month that would significantly improve the small-business outlook,” William Dunkelberg, NFIB chief economist, said in a statement. “The Index remains below its level a year ago of 94.1 which means that no progress was made in 2011. Congress has failed to pass a budget for over 1,000 days, and without discipline on spending or any budgetary priorities, there is no path to fiscal sanity in Washington.”

Small business owners are becoming slightly less pessimistic about the outlook for business conditions and sales growth, according to the report released Tuesday, but that hasn’t driven many of them hire more workers. Over the past few months, 11 percent of business owners increased employment by an average of 3 workers per firm – a number essentially offset by the 11 percent of business owners who decreased employment by an average of 2.9 workers over the same period.

On average, capital spending and company earnings also dipped in the latest report, while the net percent of owners reporting higher sales increased by a single point.

The NFIB touted the trends as evidence that the economy will continue to “crawl along at a sub-par pace” in the coming months. Dunkelberg placed much of the blame for the stubbornly low index levels on uncertainty surrounding the nation’s expanding debt and gridlock in Washington.

“U.S. debt is now larger than our GDP, and headed in the wrong direction,” he said. “This does not make for a comforting future, a fact reflected by low consumer and small-business owner optimism.”

Follow On Small Business and J.D. Harrison .

By  |  09:19 AM ET, 02/14/2012

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