Supply Chain Managers Receive Some Encouraging News

The National Federation of Independent Business (NFIB) small business optimism index rose 0.1 point to 93.9 in January, starting the year 0.2 point below last year.

Despite the soft gain, January marked the fifth consecutive month of improvements in small business optimism.

According to Leslie Levesque, senior economist for IHS Global Insight, these are the key takeaways from the index:

*Plans for business expansion took a step back from December’s reading as the percentage of respondents who believe the next three to four months is a good time to expand fell 1 point to 9 percent.

*This is likely due to lackluster earnings as the net percentage of small business owners reporting higher earnings in the last three months compared to the prior three fell 2 points to -24 percent.

*Inventories appear to be in line with sales expectations and the net percentage of owners planning to increase inventories fell 5 points to -3 percent.

*Intentions to hire in the next three months eased as the net percentage of respondents planning to increase their labor force fell 1 point to 5 percent.

*Net percentage of respondents who plan to increase prices gained 3 points to 17 percent.

Levesque told SCMR in an interview, that there are no profound implications for supply chains in the near term.

“Weak sales continue to be the main business constraint amongst small businesses,” she said. “However, the general outlook on business conditions appears less dim as the net percentage of owners who believe conditions will improve six months hence increased by 5 percentage points to -3 percent. “
This is the best reading since February, added Levesque.

According to analysts, this is not “a bad report.” Movement continues to be upward and there have been no major reversals of the progress made thus far.

“Optimism is inching out of recession levels, albeit at a snail’s pace, which can also be said about the economy as a whole,” said Levesque. “The labor and consumer markets have shown signs of improvement in recent months. However, business owners will remain cautious until substantial progress is made.”

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