Small businesses remain pessimistic

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Small business is the lifeblood of creating employment. I therefore always keep a keen eye on sentiment in this sector of the U.S. economy. The latest statistics unfortunately do not paint a good picture.

Asha Bangalore of Northern Trust said: “The survey of the National Federation of Independent Business continues to show a pessimistic outlook about business conditions in the near term. The Small Business Optimism Index fell to 90.9 in May from 91.2 in the prior month. It is important to note that the index has fallen for three straight months and the level of the index has failed to move up to levels seen during an expansionary phase of a business cycle.”

“Responses to a few questions reveal a continued gloomy assessment of business conditions. Only 3.0% of respondents expect sales to increase in the next six months, the lowest since October 2010. At the same time, the number of respondents planning to increase employment turned negative, the first such indication since April 2011 (see chart below). The number of respondents reporting inflation as problematic rose to 10%, the highest since October 2008,” said Bangalore.

Source: Asha Bangalore, Northern Trust – Daily Economic Commentary, June 14, 2011.

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