Small Business Optimism Hits Record High

Tweet

August 11, 2004 -- A new study indicates that optimism among small businesses owners may be at its highest level since before the economic expansion of the 1980s.

In its monthly Small Business Economic Trends report, the National Federation of Independent Business found that small business optimism jumped nearly three points in July to 105.9 -- crossing a threshold not seen in more than two decades. In fact, seven of the 10 key components measured by the study grew over the past month, especially the number of small businesses that expect to expand and hire new employees.

"Small business owners are pretty upbeat about job creation," said William Dunkelberg, the Federation's chief economist, in a statement.

The survey of small business owners found that small businesses hired twice as many new employees in July as in June and that 15 percent of owners plan to create new jobs in the near future. That figure ranks above any rating taken during the 1980s and is topped only by robust readings from the 1990s, the study said. Expectations for job growth are especially high in the South Atlantic states and the Pacific region and in industry sectors like transportation, wholesale trades and construction.

Respondents also showed increased expectations about the strength of the economy, sales growth and favorable trends in earnings and capital spending and, fueled by record profits and cash flow, 25 percent of owners plan to expand their businesses. Taken as a whole, the study finds a pattern for a lengthy economic expansion and reflect general optimism spreading through the small business sector.

"Things are definitely looking up," said economist Bruce Phillips. "The situation is a lot better than recent economic statistics would indicate."

One area of concern reported by a quarter of small business owners was the cost and availability of health insurance, echoing similar headlines cited by other studies.