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Survey finds small business optimism rising.


The National Federation of Independent Business's final 1989 survey of 1,800 small businesses found the optimism of small business owners on the rebound following a mid-year slump. The NFIB's "optimism index" recovered to 102.1, after declining to 99.5, the lowest point in the current recovery, in the first half of 1989.

The chief reason for the improvement appeared to be a drop in fears about inflation coupled with a more favorable business outlook.

The percentage of small business owners who raised prices in the six months preceding the survey dropped to 28%, or 8 percentage points below the first quarter figure. At the same time, the percentage of those planning price increases in the three months following the survey declined to 25%, down from 30% in the first quarter.

The softness in prices appeared to reflect a moderate slowdown in demand. Still, earnings and sales held up well and inventories remained near the lowest levels of the current expansion.

The number of companies that expect to hire new workers in the next three months rose to 16%, while the number of companies that expect layoffs dropped to 10%. Job openings were reported by 23% of the companies surveyed, close to the high of 25% for the expansion.
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Author:Baliga, Wayne J.
Publication:Journal of Accountancy
Date:Feb 1, 1990
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