Small business optimism takes third drop in as many months. Another bad reading on jobs

A survey by the National Federation of Independent Businesses released Tuesday showed small businesses are less optimistic about the direction of the economy. The release marked the third decline in as many months of the Index of Small Business Optimism, a survey that has been run every month since 1986. The index for May was 90.9. It had hit bottom at 85.2 in December 2009 and since then had been on the rise, hitting 94.5 in February, before beginning its three-month drop.

The NFIB's measurement of the metric everyone is watching, the jobs market, contained yet more discouraging news. Some details:

? There was no significant job creation on ?Main Street?, at least among NFIB?s 350,000 member firms. Twelve percent (seasonally adjusted) reported unfilled job openings, down 2 points and a clear signal that unemployment rates are headed up. Over the next three months, 13 percent plan to increase employment (down 3 points from April) and 8 percent plan to reduce their workforce (up 2 points), yielding a seasonally adjusted net negative 1 percent of owners planning to create new jobs, a very poor reading. ...

? For small firms, the average employment change was +0.01 employees (per firm) over the past three months, or virtually zero.

? Only 5% of the owners view the current period as a good time to expand; of those who view it as a bad time to expand, 71% of those blame the weak economy, and 14% cite political uncertainty. The net percent of owners expecting better business conditions in six months was a negative 5%, 15 percentage points lower than January. ...

The question being raised among economists and business analysts is whether the slowdown will be temporary or is a harbinger of a longer term problem. While most have reduced their earlier forecasts for overall growth in gross domestic product and job creation in 2011, optimists, which includes Federal Reserve Chairman Ben Bernanke, still believe the situation will improve in the second half of the year as gas prices fall and disruptions in the manufacturing supply flow caused by the tsunami in Japan are corrected.

There was some other Tuesday news to back up the viewpoint that the slowdown is temporary. While retail sales fell in May, as predicted, the drop was less than expected, which gave the stock market a boost. But today there was more bad news about manufacturing and industrial production, another drop in builder confidence and rise in core inflation. The news sent the stock market into an early tumble that ended in a skid on news about the economic situation in Greece.

Pessimists believe the slowdown is not temporary and that the continuing downward spiral in housing prices, the end of the Federal Reserve's "quantitative easing" at the end of June, the rapidly dwindling effects of the 28-month-old stimulus package and the deteriorating situation in Greece, Ireland and Spain likely will combine to extend the economy's weakness into 2012.

Source: http://feeds.dailykos.com/~r/dailykos/index/~3/RaQ1ZKNVX7o/-Small-business-optimism-takes-third-drop-in-as-many-months-Another-bad-reading-on-jobs-

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