Index: Small business outlook better, but not substantially so

William Dunkelberg

A monthly measure of optimism among small business owners continues to increase, but not yet enough to signal substantial changes in hiring or spending.

The National Federation of Independent Business reported its Index of Small Business Optimism rose 1.9 points to 90.8 in February. While the index has posted gains in each of the last three months, it remains below the 94.3 reported at this time last year as well as the pre-recession average of 100.

“The index gained almost two points last month. That was the good news.

But until owners’ forecast for the economy improves substantially, there will be little to boost hiring and spending from the small business half of the economy,” said Bill Dunkelberg, chief economist of the NFIB.

“While the Fortune 500 are enjoying record-high earnings, Main Street earnings remain depressed,” Dunkelberg said. “Far more firms report sales down quarter over quarter than up.”

The NFIB bases the index on the results of monthly surveys of members of the small business advocacy organization. For February, eight of 10 components of the index advanced.

The proportion of small business owners responding to the survey upon which the February index was based who said they expect the economy to improve over the next six months rose two points, but remained at a net negative 28 percent.

A seasonally adjusted 4 percent of owners said they plan to increase staffing, up a point. Meanwhile, 21 percent of owners reported unfilled job openings, up three points.

The share of owners who expect to make capital outlays over the next three months climbed four points to a net 25 percent. Only a net 5 percent of owners said they consider now a good time to expand, down a point.

The proportion of owners planning to increase inventories jumped six points, but remained at a net negative 1 percent. A net 1 percent of owners characterized current inventories as too low, up two points.

The share of small business owners who expect higher real sales volume climbed two points to a net 1 percent. That proportion remains 11 points lower than this time last year. Moreover, 18 percent of owners cited weak sales as their most pressing business problem.

Reports of positive earnings trends remained unchanged at a net negative 26 percent.

 

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Posted by on Mar 18 2013. Filed under Business News. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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