Outlook for U.S. small businesses improves

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This post is a guest contribution by Asha Bangalore, vice president and economist of The Northern Trust Company.

The Small Business Optimism Index moved up to 93.8 during December from 92 in the prior month. The improvement is noteworthy and it is the highest since February 2011. However, the level of the index is within the range seen during the recession (see Chart 1).

Of the sub-indexes, the percentage of respondents indicating that poor sales have been problematic declined to 23% in December vs. 25% in the previous month. Further reductions of this component of the survey would point to a turnaround in business conditions.

Among other highlights of the survey, only 8.0% reported credit is harder to get, one of the lowest readings for the year (see Chart 3). Somewhat contradicting the December employment report is the fact that only 1.0% of respondents indicated that they increased employment in the last three months. Overall, the December report on small businesses records more positives than negatives.

Source: Asha Bangalore, Northern Trust – Daily Economic Commentary, January 10, 2011.

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