Small Biz Optimism on the Rise, Survey Says [AUDIO]
Nationally, small business optimism is the highest it has been since third quarter 2008, and that's the key finding in the latest Wells Fargo/Gallup Small Business Index, which has improved 9 points since second quarter and 36 points since the fourth quarter of 2012.
"Right away you look at the fact that it's the highest level of optimism that we've had in five years," says Wells Fargo executive vice president John Cole, manager of the business banking division for the northeast region. "Granted it's not where it was pre-recession, but I think we should feel good about the slow kind of cautious recovery that we're seeing in optimism."
Small business owners say they feel more optimistic about their ability to access credit over the next year. In the survey, 28 percent expect credit to be very or somewhat easy to obtain in the next 12 months, up from 24 percent in the second quarter of 2013 and the highest percentage since 2009.
Thirty percent expect credit to be difficult to obtain in the next 12 months - down significantly from the 36 percent recorded last quarter and the lowest this measure has been in five years.
"I'm very excited about the fact that fewer small business owners expect credit to be difficult to obtain," says Cole. "I think that's an excellent sign and I think it's very consistent with what we're seeing in New Jersey. Our (Wells Fargo) pipelines are up dramatically from the first quarter in terms of new loan production. "
The survey also asked business owners about today's real estate and housing market, and its impact on their businesses.
A majority of small business owners (57 percent) say they have seen an overall improvement in the housing market in their area. At the same time, 42 percent report that their business relies either somewhat (22 percent) or a great deal (20 percent) on a strong housing market. Almost half, (45 percent) indicate that a rise in housing prices would improve their business's sales either somewhat (33 percent) or a great deal (12 percent).
"When the housing outlook improves there's a lot of ancillary business and industry that improves," explains Cole. "Construction and contracting and a lot of other reliant industries improve so I think it's a good sign."
A quarter of small business owners report an increase in capital spending in the past 12 months. Additionally 26 percent are planning to increase spending in the next 12 months, consistent with last quarter's results. The number one reason business owners cite for not making a capital investment is continued concern about the overall state of the economy (64 percent) followed by uncertainty in the future of their business (57 percent).
The optimism expressed in the Index pretty much mirrors the attitude of New Jersey's small business owners according to Cole and while the economic recovery is slower and more cautious than we would all like he feels, "the trend is sustainable."