Saturday, October 18, 2008

Important To Look At Small Business Trends

One segment of economic information that I find important to review on a regular basis is data on the small business segment of the economy. Small business represents roughly 99.7% of all employer firms and 80% of all new jobs in the U.S so the health of this segment is important to future economic growth. The NFIB organization, National Federation of Independent Business, is the leading small business association representing small and independent businesses. It is a nonprofit, nonpartisan organization founded in 1943.

The NFIB Index of Small Business Optimism rose 1.8 points to 92.9 in September continuing one of the longest strings of recession level readings in the history of the survey (started in 1973), but headed up for the second month in a row.

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NFIB Optimism Index September 2008
In addition to this small positive, small business owners continued to liquidate inventories, a negative for third quarter Gross Domestic Product numbers. However, when, not if, the economy starts to gain traction, these low inventory levels will mean small companies will need to ramp up production quickly. This will contribute to a rapid restart to economic growth.

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small business inventories September 2008The U.S. Census Bureau's inventory to sales ratio also remains in a longer term downtrend.

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inventory to sales chart September 2008Chart Courtesy of U.S. Census Bureau


NFIB Small Business Economic Trends (PDF)
National Federation of Independent Business
By: William C. Dunkelberg and Holly Wade
October 2008

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