Business optimism in April highest in 6 months

Business optimism is at a 6 month high.   According to statistics by the National Federation of independent business, optimism by businesses is the highest since late last year in several key categories. The organization’s optimism index increased to 92.1, up from 89.5 in March 2012, and the 2.6 point gain was the highest jump since October 2010.  The survey size was 1,873 firms.

According to the statistics, businesses are optimistic in multiple areas, including planning to hire new employees, with 6% of respondents planning on hiring new employees versus 0% in March 2013,  and 1% in January 2013.  23% planned on moving forward with increased capital spending versus 20% in December 2012.  4% expected higher sales versus none in the previous months.   Another important area of improvement is an increase in increased sales prices from 0% at the end of 2012 to 3% in April.   Businesses have confidence that consumers will be willing to pay rather than be driven off by higher sales prices.

These statistics are not reflective of a strong economy, rather continuation of a slowly rebounding economy.  The surge in the stock market over the last 2 years has been cited as a reason for optimism by many companies in other recent polls.

There has been virtually no shift in businesses’ view of an ease in credit conditions, which
continues to be viewed as difficult with tight access to credit markets.  Businesses continue to report having difficulty obtaining the financing needed for new hires, and other capital spending needs such as expansion.  These tight credit markets are causing many businesses to research alternative growth financing such as accounts receivables financing, contract financing, loans based on gross sales such as bank statement loans, loans  that businesses can obtain based on the sales of the business.  This funding can be accessed through networks and hedge funds specializing in alternative business loans.

The National Federation of Independent Businesses stated in summary that 4 of the index’s 10 main components measured contributed to most to the increase in the optimism percentages.   The SBA, Small Business Administration states that small businesses are considered to be less than 500 employees, which represents 99% of all companies.