A economist that specializes in the manufacturing sector sees "beginning stages for some optimism" in the small business community which, in turn, indicate "solid" economic news for many U.S. manufacturers in 2011.

"The small business community drives the economy and is vital to any sort of real recovery," says Dr. Chris Kuehl, economic analyst for the Fabricators & Manufacturers Association (FMA), Rockford, Ill. "In manufacturing, the connection is even more obvious as 95 percent of manufacturers employ fewer than 500 workers and half run operations of less than 100 employees."

In the current FMA economic update newsletter Fabrinomics, Kuehl asserts there is a mood of optimism in the small business community, citing the National Federation of Small Business Optimism Index that rose by 2.7 points and now sits at 91.7.

"That is certainly progress and there are some movements in the sub-index that look more promising yet," he says. "There is an expectation that demand will increase as the expected sales increase jumped by 4 percentage points – marking the first positive movement in that sub category since the start of the recession in 2008."

There also was an 11 percent gain in the index that marks expected business conditions in the next six months.

"That is consistent with some of the other elements, which indicate many in the small business community think 2011 will be what most of them had expected 2010 to be," Kuehl adds. "There has even been some improvement in terms of the hiring index as it rose by 4 percent as well."

"None of this data suggests there is euphoria in the community, and the numbers are well below what used to be considered normal," he says. "In fact, the 91.7 reading is still in recession territory and that tells an important story as well. The bottom line is that conditions are improving but slowly, and there is no real sense that there will be dramatic recovery much before the end of next year - at the earliest."

Kuehl stresses three factors must occur in the small business community for a recovery to occur. Most critically, consumer demand must return. In addition, businesses need access to capital to meet that expanded need, and business owners will require a semi-predictable environment in order to plan how to grow their businesses.