Independent U.S. Shippers Not Out of the Woods Yet

Last week we noted that retailers were expressing relief that the “fiscal cliff” had been avoided. The impact of such a threat, however, has yet to be measured. According to the National Federation of Independent Business (NFIB) Small Business Optimism Index optimism remained at recessionary levels in December with just a half-point increase in the index over November.

Furthermore, business owners continue to have low expectations about the future of the economy. Only three of the ten index components were down, but still, there were no major improvements in the remaining components.

Two of the down categories were related to employment conditions. The net percent of owners adding to their labor force in the last three months fell 1 point to -2%, and plans to hire in the next three months fell 4 points to a net 1%. Skepticism about future business conditions is likely behind the reading, as those reporting under-qualified applicants as an issue behind filling positions fell for a third consecutive month.

Business owners continue to report growing inventories, however they are feeling more satisfied with their current levels than in November. A net -4% are planning to add to stocks in the next three to six months, a point higher than in November. Sales expectations for the next three months improved a bit to -2% from -5%.

The bottom line?

With no additional information on how the fiscal cliff would play out before the December reading, it was tough for small business owners to give a positive report on their sentiment.

Economists say that the small improvements here and there were not enough to boost the overall outlook. It is still tough to tell how small business owners will react in January since the resolution of the fiscal cliff.

IHS Global Insight believes that it is likely that many were not fully satisfied with the outcome.

SC
MR