Confidence among U.S. small companies rose in October for a second month, reflecting less pessimism about the outlook for sales and the economy, a private survey found.
The National Federation of Independent Business’s index climbed to 90.2, the highest level since June, from September’s 88.9, the Washington-based group said today in a statement. The gauge averaged 88.6 in the 18-month recession that ended in June 2009.
Companies are hesitant to hire and boost spending in the face of 9 percent unemployment, falling home prices and constrained credit. Federal Reserve Chairman Ben S. Bernanke last week said the recovery from the 2008-2009 recession will likely remain “frustratingly slow,” and that additional stimulus “remains on the table.”
“It’s hard to call it a recovery with unemployment about as bad as it was at the recession bottom,” William Dunkelberg, the group’s chief economist, said in a statement. “Prospects for the future have not improved.”
The net share of owners projecting higher sales, adjusted for inflation, rose two points to minus 4 percent. A gauge of expectations for better business conditions six months from now climbed six points to a net minus 16, marking a second monthly gain from a record-low of minus 26 in August.
The survey’s net figures are calculated by subtracting the percent of business owners giving a negative answer from those with a positive response, and adjusting the results for seasonal variations.
The net share of owners planning to hire over the next three months fell one point to a net 3 percent, marking a second monthly decline. Small-business owners reported a reduction in employment for a fifth month in a row.
A gauge of whether small firms think this is a good time to expand increased one point to a net 7 percent. Plans for capital investment rose one point to a net 21 percent, still a “recession-level reading that has typified the recovery to date,” Dunkelberg said. The measure averaged 30.5 during the prior expansion.
A measure of earnings trends increased by one point to a net minus 26 percent, the report showed. At the same time, a net minus 11 percent of small businesses said they expect easier credit conditions, a one-point improvement from the prior month.
The NFIB report was based on responses from 2,077 small-business owners through Oct. 31. Small companies represent more than 99 percent of all U.S. employers and have created 65 percent of new jobs in the past 17 years, according to the U.S. Small Business Administration. A small business is defined as an independent enterprise employing as many as 500 people.