Small Business Optimism Maintains Slow but Steady Rise

The collective mood of small businesses continues to improve, shedding doom and gloom in favor of an apparent light at the end of the recessionary tunnel. So says the latest Index of Small Business Optimism from the National Federation of Independent Businesses, which just checked in with its highest rating in nearly three years.

The November number of 93.2 — an increase of 1.5 points from the previous month — is the highest since December 2007, and marks the fourth straight month of growth for the index. The November report polled 807 NFIB-member firms.

That clicks with a similar survey conducted recently by Wells Fargo and Gallup, which also found rising optimism among small businesses after its gauge had dipped to a record low in the previous quarter.

The four-month positive streak for NFIB’s index seems to belie any notion that this a temporary uptick, which happened earlier this year when increases in March and April were followed by three straight months of drops. Rather, it indicates slow, steady progress by businesses approaching the end of the recession’s rough road.

Recent retail figures issued by the federal government offer more reasons to be upbeat: The Commerce Department on Tuesday announced that retail sales grew a better-than-expected 0.8% in November from the previous month — the fifth straight monthly increase. Total sales were 7.7% higher than November 2009. Excluding the automotive market, which dipped, retail sales were up 1.2 % from October to November. Also on Tuesday, the National Retail Federation bumped up its holiday sales expectations.

Though no one has a crystal ball, the forward-looking view of businesses is likewise getting rosier: The net percentage of businesses in the NFIB’s report that think conditions will be better (instead of worse) six months from now doubled to 16 points, up from a net 8% in October. Wells Fargo’s poll posted its highest number in the “future expectations” column in more than two years.

Happy new year, indeed.

About Kevin Casey

Kevin Casey is a regular contributor here, at InformationWeek and elsewhere. Find him on Twitter @kevinrcasey.
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