Half Empty or Half Full?

Pick your poison, or rather, indicator of small-business sentiment, because surveys and other indicators are all over the map.

Consider, this morning, HSBC is out with its semiannual survey of small-business sentiment across the globe. According to that survey, conducted in May and June, small businesses around the world are feeling pretty good about their prospects.

Of course, they’re feeling better in developing countries than in mature economies such as North America and the European Union. But still, those business owners aren’t feeling so bad even in North America.

Overall, HSBC’s index of small-business confidence in 21 markets climbed to 118 in the second quarter, up from 111 in the fourth quarter of 2009.

That’s a nice jump, but what about the picture a little closer to home?

Well, HSBC’s index for North America climbed to 119 from 107. So if that latest survey is any indicator, small businesses in the U.S. and Canada are feeling better about their prospects.

That fits pretty well with a survey of economists released earlier this week by the National Association of Business Economics.

That survey shows 31 percent of businesses added to their payrolls in the second quarter of this year, while 14 percent cut jobs. It’s a dramatic reversal from the depths of the recession in the second quarter of 2009, when only 6 percent of businesses added workers and 36 percent were cutting jobs.

Further, the survey shows 39 percent of businesses expect to add workers, the highest level since January 2008, near the beginning of a recession that has driven the U.S. unemployment rate to its current level of 9.5 percent.

Those numbers are good news. But the 84 economists who took part in the survey don’t exactly expect a booming economy. Sixty-seven percent of them expect the U.S. economy to grow by more than 2 percent this year, but only 20 percent expect gross domestic product growth of more than 3 percent.

But those aren’t the only surveys out there.

The National Federation of Independent Business’ closely watched monthly survey of small-business attitudes released last week showed small-business owners more pessimistic in June.

The lobbying organization’s small-business optimism index fell 3.2 points, to 89, after showing gains through the spring. The survey shows small businesses having difficulty accessing credit, worrying about future revenue, and cautious about plans to hire.

And here’s another, slightly offbeat, indicator that small businesses aren’t where they should be. Executive placement firm Challenger Gray & Christmas released a report earlier this week that showed only 3.7 percent of out-of-work Americans chose to start their own businesses. That’s the lowest two-quarter average of business formation by unemployed workers since the firm started tracking the issue in 1986.

“It is difficult to pinpoint the exact reason behind the decline in startup activity among former managers and executives. On one hand, it could be that the job market has improved to the point that many do not feel compelled to take the risk of going it alone. Then there is the fragility of the recovery and the uncertainty that comes with it. Many small-business owners are increasingly pessimistic about business conditions and still find it difficult to get a loan,” said John Challenger, chief executive officer of Challenger Gray & Christmas.

So what’s right? The half-empty or the half-full indicators?

Probably both. There’s no question that the economy remains week. Consumer spending still isn’t where it should be to feed the appetite of businesses looking for signs of expansion. The unemployment rate still hovers close to 10 percent. And businesses are still having a very hard time finding credit.

At the same time, the economy is still growing, and with it, hopes for improvement.

So there it is in a nutshell—the uncertainty that’s keeping this recovery anemic at best.

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Kent Bernhard Jr. is News Editor of Portfolio.com