Tradex Global Commentary: NFIB Small Business Indicators

TRADEX GLOBAL INTERNAL COMMENTARY

The NFIB Index of Small Business Optimism dropped to 94.4 from 94.5.  Confidence is a very difficult feeling to describe.  It isn’t tangible, but you know when you’ve “got it” and you know when you don’t…Small business owners are not expecting to raise prices, and are expecting to sell less product and make less money.  A bright spot is that they may be looking to hire more employees, but this factor doesn’t quite fit in with the overall message we have been receiving.  Greece, Spain, and Europe in general, are major factors weighing on the US economy and sentiment.  We have increased our hedges ahead of the Greek Parliament Elections on Sunday.  I’m usually quite the optimist, but right now my confidence is down… – Richard Travia

EXTERNAL RESEARCH COMMENTARY

Small-business owner confidence dipped slightly in May, as sales expectations dropped, according to data released Tuesday. The National Federation of Independent Business's small-business optimism index fell 0.1 point to 94.4 in May. The NFIB said the index is back to its level of February 2011. "The Index has produced no signs that economic activity will pick up at all," the report said. Small business owners are slightly more upbeat about overall economic conditions but a growing proportion worry about future demand. The subindex of expected business conditions in the next six months increased 3 percentage points to -2% last month, but the expected higher real sales subindex declined 4 points to 2%. The net earnings trend subindex weakened 3 points to -15%, but that followed a large 11-point gain in April. The May new-jobs subindex rose one point to 6%. The net change in employment per firm was zero in May. Among small business owners looking to hire, a greater percentage report greater difficulty finding qualified workers. The job opening hard to fill index rose 3 points to 20% in May, the highest reading since June 2008. Fewer small businesses are raising prices. Seasonally adjusted, the net percent raising selling prices dropped 5 points to 3% in May. "There isn't much pressure on prices coming from Main Street, good news for the Fed," the report said.

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