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Optimism Index indicates improved sales trends for US small business owners

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The National Federation of Independent Business's (NFIB) recently reported improved sales trends, a lift in sales activity and a surge in employment for small business. With their ‘optimism index’ seeing an increase from 96.9 in April to 98.3 in May.

According to a recent article in the Wall Street Journal small business owners in the US are feeling increasingly confident about their financial positions.

Surveyed by The Wall Street Journal, economists made projections for the index to increase to 97.3 in May.

However the report showed an increase that exceeded its 42-year average of 98.0.

The NFIB states:

“It appears that the small-business sector has finally attained a normal level of activity, which will hopefully keep the economy moving forward, even at a sub-par pace.”

In particular small business sales increased over the three month period prior to its end in May; where sales activity increased peaked.

The net percentage of higher sales reported by businesses jumped 11 percentage points to 7%, sparking optimism among business owners.

With many expecting the landscape to keep improving, the conditions are expected to increase 3 points to minus 3% in the coming months.

In turn these higher sales have lead small companies to hire in what the NFIB call 'the fifth consecutive month of “solid” job increases'. The report also shows that business owners hired a net 0.13 workers per firm in the three month time frame.

Despite this surge in employment, it is still proving tough for small businesses to find the right applicants. With 29 percent having job openings that they could not fill – the highest number since April 2006, according to the Wall Street Journal.

The stronger economic climate is also driving up the price of products and services as more and more small businesses mark increase their prices. The Journal stating that “If the strength in sales gains persists, owners will have more opportunities to raise prices”.

In the three months running up to May, the net percent of owners who upped their selling prices stood at 6%, an increase of 4 percentage points.

However, as optimism rises amoung small business owners, Bill Dunkelberg, NFIB Chief Economist also states: 

“The NFIB May survey results confirm that the economy is moving ahead, but at an uninspiring pace. Owners do what is necessary, like hiring workers when needed, to keep up with growth mostly powered by an increasing population.” 

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