US Economics for Mid-May, 2013

Improvement in the Small Business Optimism Index in April

The Small Business Optimism Index gained in April to a level of 92.1 from the previous level of 89.5.  This new Small Business Optimism Index is now at the highest level in six months, and has caused what many have considered a full reversal of any Q4 2012-Q1 2013 weakness.  To show it in contrast, the index was measured in Q1-Q3 2012 with an average of 93.1, and then fell to an average of 89.6 in Q4 2012-Q1 2013.  The Index is now showing an improved small business sentiment lately.

Some of the reasons for the recent improvement include the fact that the number of firms that expect the economy to get worse has fallen from 29% of those polled in Q1 2013 to nearly half that number, or 15%.  Additionally, 4% of polled firms are factoring in higher sales in the next half a year, and now 6% of firms are planning hiring new employees, compared to 0% the month earlier.

Import Prices fell by 0.5% in April

The prices of imported goods fell in April, down by 0.5% from before.  The main input into the decline was fuel prices, but other sections were also down, including the price of food, capital goods, autos and industrial goods falling by 0.2%.

Divergent Store Sales

The Redbook store index got stronger while the ICSC index got weaker as measured during Week 1 May 2013.  In Q4 2012 the optimism of large business weakened, but showed strengthening in Q1 2012 to higher levels.  The NFIB index has very well returned to the levels that have not been seen since the election, but overall the overall Small Business Optimism remains well below the amount that was recorded pre-recession.  As an example, before the recession, the Small Business Optimism Index had an average number of 100.

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