Small Business Optimism Hits Highest Level in Five Years

February 07, 2014, 07:02 AM

Filed Under: Economic Commentary

Related: Wells Fargo

Small business owners are the most optimistic they have been in five years, according to the latest Wells Fargo/Gallup Small Business Index, and expect their businesses to increase cash flow and hire more employees in 2014.

In a small business survey conducted Jan. 6-10, the overall score increased to a positive 45 (+45) in January, up from a positive 24 (+24) in October 2013. While this score is the highest it has been since the third quarter of 2008, it is still well below pre-recession levels. Several factors contributed to this quarter’s increase in small business optimism compared to fourth quarter 2013:

Improved cash flow: In the January survey, more small business owners said they had good cash flow over the past 12 months than they did last quarter (52 percent compared to 46 percent). A larger majority of business owners also expect to have good cash flow in 2014 (57 percent compared to 52 percent).
Increasing hiring: More small business owners said they expect to increase hiring in the next 12 months than in last quarter’s survey (22 percent compared to 16 percent).
Increasing revenue: A larger percentage of small business owners expect their revenue over the next 12 months to increase (48 percent compared to 44 percent).
Accessing credit: Fewer small business owners in the current survey reported having difficulty obtaining credit than did so last quarter (23 percent compared to 27 percent).

“There are many reasons for small business owners to view 2014 as a promising year,” said Lisa Stevens, Wells Fargo lead executive for Small Business and Pacific Midwest Regional Banking president. “There’s less uncertainty in the economy than there has been for quite some time. Congress approved a federal budget deal at the end of last year. The stock market performed well in 2013, and capital spending has picked up. With each piece of good news, business owners gain a little more confidence to grow and expand. We know that small business owners still face many challenges, yet hope this momentum continues as the economy improves further.”

To read the full release, click here.