After a tough start to the new year, small businesses may finally be seeing steady improvements, as the latest survey from the National Federation of Independent Business revealed that small business optimism rose again in July. This latest survey indicates that small business financing may be steadily gaining traction in the aftermath of the recession.
The Optimism Index rose 0.7 points during the month to a reading of 95.7. While this is a good sign for small businesses, the index is still historically low.
“On the positive side expectations for business conditions and outlook for expansion accounted for virtually all of the net gain in July’s Index,” said Bill Dunkelberg, chief economist for the NFIB.
Hiring also rose marginally during the month, marking the tenth consecutive month of improving sentiment among small business owners. This is the greatest “string of gains” since 2006. On a seasonally adjusted basis, 13 percent of business owners reported that they added an average of 2.9 workers over the last few months. Seventy-five percent of owners reported no change in employment in July. In the past three months, 53 percent said they hired or tried to hire more workers, but 42 percent reported a lack in qualified applicants.
However, there is some good news for hiring throughout the rest of the year, as job creation plans rose 1 percent in July, reaching a total reading of 13 percent. This represents the best reading since September 2007.
Credit conditions also improved during the month, which is positive for owners who need cash for businesses. Just 6 percent of business owners reported that their credit needs were not met during the month, unchanged from the previous month. This is just two percentage points above the record low for credit markets. However, only 2 percent of owners reported that their top concern was small business funding, citing other issues like taxes, regulation and bureaucratic red tape as bigger concerns.