Small businesses grow more confident as hopes increase for an upturn in US

Tim Wallace
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CONFIDENCE in American small businesses has hit its highest level since last February as increasing numbers of firms looked to expand in December, according to data out yesterday from the National Federation of Independent Business (NFIB).

The small business optimism index rose by 1.8 points to 93.8.

The index has now gained 5.7 points over the last four months, suggesting an improving trend.

A net balance of eight per cent expect the economy to worsen – an improvement on the previous month’s 12 per cent – whilst a net balance of 10 per cent believe “now is a good time to expand,” up from eight per cent a month earlier.

“Given the small business sector accounts for half of the US economy, in terms of both output and workers, this is good news and suggests that activity is gaining momentum,” said James Knightly, economist at ING.

“Nonetheless, the Eurozone situation could yet drag the US down with it so caution is warranted.”

However, NFIB warned “the total reading is still in recession territory.”

Meanwhile wholesale inventories grew by just 0.1 per cent in November, according to data out yesterday from the  Commerce Department.

October’s figure was also revised down from 1.2 per cent to 1.6, which could lead economists to cut back their fourth quarter GDP forecasts.