WASHINGTON (MNI) – The following is the text of the National
Federation of Independent Business’ monthly Small Business Optimism
index published Tuesday:

Small-business optimism rose for the third consecutive month,
gaining 1.8 points in November, and settling at a still weak 92.0,
according to the National Federation of Independent Business’ (NFIB’s)
latest index. The majority of index components (8 of 10) improved or did
not change from the previous reading; the most notable increases posted
in expectations for real sales gains and the outlook for business
conditions. Optimism appears to have climbed because fewer owners expect
business conditions or sales to be worse in six months, indicating some
hope on the horizon. Improvement, although small, was widespread with
the forward-looking components indicating positive trends for the first
time in many months.

“After so many months of pessimism, November’s modest gain made it
feel like spring, again,” said NFIB Chief Economist Bill Dunkelberg. “We
have good reason to be optimistic about last month’s report and hopeful
about what it means for the future. Still, our current reality is still
very much the ongoing economic winter. November’s reading is still well
below the average reading prior to 2008 levels from previous recoveries.
More acutely, it is 2 points below January’s index, which means that
there has been no progress over the calendar year. We should be
encouraged, but cautiously so.”

According the November’s survey, the percent of owners reporting
“poor sales” as the top problem remained stubbornly high at 25 percent
followed by 19 percent reporting both taxes and regulations. Inflation
remained unchanged at six percent and interest rates fell 1 point to
three percent as owners’ top problem.

Optimism Components Net % Change

PLAN TO INCREASE EMPLOYMENT 7 +4

PLAN TO INCREASE CAP. OUTLAYS* 24 +3

PLAN TO INCREASE INVENTORIES 0 0

EXPECT ECONOMY TO IMPROVE -12 5

EXPECT HIGHER REAL SALES 4 +8

CURRENT INVENTORY
SATISFACTION -1 -1

CURRENT JOB OPENINGS* 16 +2

EXPECTED CREDIT CONDITIONS -10 +1

NOW A GOOD TIME TO EXPAND* 8 +1

EARNINGS TRENDS -28 -2

* Note: These components are measured as actual percentages of all
respondents and are not net percentages. A net percentage is the percent
positive minus percent negative.

Some other highlights of November’s Optimism Index include:

– Sales reports improved in November, albeit marginally, and still
remaining negative overall, rising to a net negative 11 percent, with
more firms reporting sales trending down than up. As in previous months,
a full quarter of owners indicated “poor sales” is their top business
problem. Unadjusted, 21 percent of all owners reported higher sales
(last three months compared to prior three months, down 1 point) while
29 percent reported lower sales (down 1 point). Most of the reports on
sales volume were made before “Black Friday”; the impact of that level
of spending will show up in the December reports on sales. The net
percent of owners expecting higher real sales gained 8 points to a net 4
percent of all owners (seasonally adjusted), but still 9 points below
January 2011’s reading.

– The net percent of owners expecting better business conditions in
six months was a negative 12 percent, 4 points better than October, but
still 22 percentage points below January’s reading. Not seasonally
adjusted, 29 percent expect deterioration, 12 percent expect
improvement. A net four percent of all owners expect improved real sales
volumes, a huge 8 point gain over October.

– The employment picture brightened last month, ending five months
of decline. In November, NFIB owners reported an overall increase in
employment of 0.12 workers per firm in November. Seasonally adjusted, 13
percent of the owners added, while 11 percent reduced employment. The
remaining 76 percent of owners made no net change in employment.
Forty-seven percent of owners hired or tried to hire and 35 percent of
them reported few or no qualified applicants for positions. Sixteen
percent (seasonally adjusted) reported hard to fill job openings, up 2
points from the previous month.

– Future hiring plans were also positive. Over the next three
months, a seasonally adjusted net seven percent of owners plan to create
new jobs-a 4 point improvement from October and the strongest reading in
38 months. Historically, during an expansion plans to hire should be in
in the double digit levels.

– The frequency of reported capital outlays over the past six
months rose 1 point to 53 percent, the second monthly increase in
succession after languishing between 45 and 52 percent for the last 12
quarters. The percent of owners planning capital outlays in the next
three to six months rose 3 points to 24 percent, the highest reading in
40 months (also reached in March this year). Money is available, but
most owners are not interested in a loan to finance the purchase of
equipment they cannot use. Only eight percent characterized the current
period as a good time to expand facilities (seasonally adjusted), up 1
point and only 1 point below the best reading in the past 38 months.

** Market News International Washington Bureau: 202-371-2121 **

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