Reuters – The outlook for general business conditions moved higher as conditions expected to improve in three to six months.
U.S. small businesses grew more optimistic last month on the prospects for economic growth and stronger sales, a survey released by the National Federation of Independent Business stated. The survey said its monthly index of small business optimism rebounded 5.8 points in April to 86.8, breaking a four-month pattern of declines.
“Perhaps this is the beginning of the end of the recession,” said William Dunkelberg, chief economist for the NFIB. “However, the report indicated no immediate turnabout as the improved numbers were still very low.”
Plans to make capital expenditures over the next few months rose 3 points to 19 percent in April, still a very low level, but headed upward for a change, the group said.
The outlook for general business conditions moved sharply higher, jumping by 24 points as a majority of survey respondents expected that conditions would improve over the next three to six months, the group said.
Expectations for gains in real sales also surged, gaining 20 points from March’s record low level, NFIB said.
While business owners think future prospects are brighter, the daily realities show deep problems remain,” the group said.
Small business owners continue to liquidate inventories at a record pace and price pressures make it difficult for owners to generate enough capital internally to make capital outlays, even if they were inclined to do so, NFIB said.
“New orders will remain depressed until stocks look lean relative to expected sales, which are finally starting to show some improvement, even if still on the dark side,” said Dunkelberg.
While more owners plan to create new jobs during the next three months, the pace has slowed, the group said.
“It appears that owners are not through with their labor-based cost-cutting,” Dunkelberg said.
Not seasonally adjusted, job creation plans were positive in all industry groups except the wholesale trades and manufacturing sectors, which remained weak due to the inventory run-off and the auto industry debacle, the group said.
“At least we seem to be headed in the right direction,” Dunkelberg said. “Typically, optimism first returns, then spending follows as confidence builds. But there are a lot of difficult days ahead, even if April’s data represents a turnabout.”