Small Business Optimism at 7-year High, Poll Says
"Small business optimism is at the highest level in seven years," said Jane Navarria, Wells Fargo business banking area manager for New Jersey. "While it's still below pre-recession levels, it's the highest that it has been since January 2008."
The uptick in optimism was attributed to several improving factors:
- Revenue: 49 percent of small business owners reported their revenues increased either a little or a lot over the past 12 months, up from 37 percent one year ago. This is the highest revenue reading since 2007, when 52 percent of small business owners reported increases.
- Cash flow: Business owners' cash flow improved over the last year, with 54 percent rating theirs as very good or somewhat good. That's a slight bump from 52 percent in the first quarter of 2014.
- Hiring: More business owners (19 percent) increased the number of jobs at their companies over the past 12 months. Only 11 percent reported a decrease, down from 16 percent in a survey from last quarter.
- Access to credit is another area that has seen some progress.
"I think the overall index score speaks to the general improvements that many small businesses are experiencing and that the future is bright, and that they're feeling optimistic with the economy improving every day, and they're feeling a renewed sense of confidence," Navarria said.
The index is computed on a scale of zero to positive (+) 100, using a formula that scores and sums the answers to a series of small business-related questions about the present situation and about the future. The latest overall index score jumped to +71, significantly up from +58 in November 2014 and +45 in January 2014. An index score of zero indicates that small business owners, as a group, are neutral -- neither optimistic nor pessimistic -- about their companies' situations.
Business owners' perceptions of their current situations, meanwhile, continue to rise each year, and are now up 57 points from their lowest mark in the first quarter of 2010.
"Small business owners are expecting a good year ahead, and if small businesses are hiring, more people have jobs and we have less problems with foreclosures and housing issues," Navarria said.
The survey was based on telephone interviews with 603 small business owners from Jan. 5 to Jan. 9. The margin of error is plus or minus four percentage points.