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Small Business Optimism Highest in 3 Years

Small Business Optimism Highest in 3 Years

Small Business Optimism Highest in 3 Years

Wells Fargo has just released the quarterly results for the Small Business Index, and the news is good for small businesses. According to the Small Business Index survey, small businesses have the highest optimism reading than they have had in the last 3 years.

Highlights from the Small Business Index report include:

  • Optimism jumped to an index score of 15 during the first quarter of 2012. This is an 18 point gain from the index score of negative 3 for the fourth quarter of 2011.
  • The boost in optimism reflects an increasingly strong economic environment at the start of 2012 for small businesses.
  • The dramatic increase in optimism index scores is likely the result of increased consumer spending, the improved labor market and the recent increase in construction spending.
  • A higher percentage of small businesses reported increased capital spending and revenues over the past 12 months.
  • 25 percent of businesses reported it was either “somewhat easy” or “very easy” to obtain credit during the first quarter of 2012 – an increase from the approximately 20 percent of businesses which reported the same in the fourth quarter of 2011.

Another startling result of the Small Business Index survey was that small businesses are more confident about their business situation heading into 2012. The Future Expectations component of the survey for the first 2012 quarter increased a striking 13 points to a positive 21 – which is the highest score on this part of the survey since the first quarter of 2011. Small businesses also reported that they expect to see increased revenue and an improvement in cash flow, the ability to obtain credit and their financial situations in 2012.

While the results of the Small Business Index report shows increased optimism, the results also reveal that small businesses are continuing an uphill recovery from the sluggish economy. For example, there was little change in small businesses hiring, current financials and cash flows compared to the fourth quarter of 2011. However, in the survey more business owners predicted plans to increase hiring and capital spending in 2012 – which means that small businesses may play a larger role in the 2012 economic recovery.

References

Wells Fargo Business Insight Resource Center

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