An index measuring the optimism of small business owners jumped 2.7 points, to 91.7—“not a huge move, but at least a decent jump,” according to the National Federation of Independent Business (NFIB) on Tuesday, whose Index of Small Business Optimism has finally started to turn around.
According to Chief U.S. Economist Ian Shepherdson of High Frequency Economics, the index was only expected to hit 90 by economists; this five-month high is good news. “We have long argued that a proper recovery in the broad economy,” said Shepherdson in an analyst note, “requires a sustained improvement in the small firm sector, which employs half the workforce.”
While the NFIB cautions that the index is “still in recession territory,” several indicators are showing marked improvement, most notably average employment growth per firm, which in October rose to 0. Not much, you say? That zero is “one of the best performances in years,” according to the study. Reaching that level, says the study, “raises the odds that Main Street may contribute to private sector job growth for the first time in over a year.” A seasonally adjusted 10% still have unfilled job openings; this is down one point and in weak territory historically.
The number of small businesses planning to hire in the next three months is unchanged at 8%, but those planning to lay off are down by 3 points to 13%—a marked improvement that results in a seasonally adjusted net 1% of owners who plan to create new jobs. That’s a four-point jump from September’s figures.