A monthly measure of optimism among small business owners has retreated but remains near the highest readings in the history of the index.
The National Federation of Independent Business reported its Small Business Optimism Index fell 2.9 points in March, But at 104.7, the latest reading remains high.
“Although expected sales and expected business conditions posted large declines, it was from historically high levels. And this left the overall index reading among the 20 best in survey history,” said Bill Dunkelberg, chief economist of the NFIB. “Hiring and spending on new buildings and land acquisition remained at strong levels, a good sign of confidence in economic prospects.”
The NFIB bases the index on the results of monthly surveys of members of the small business advocacy group, most of them small business owners. For March, eight of 10 components of the index declined, while two advanced.
The proportion of small business owners responding to the survey upon which the March index was based who said they expect the economy to improve fell 11 points from February to a net 32 percent.
The share of owners who said they consider now a good time to expand fell to 28 percent, down four points from the highest reading in the 45-year history of the index. A net 26 percent of owners said they plan to make capital outlays, down three points.
A net 20 percent of owners said they expect increased sales, down eight points from one of the highest readings since 2007. At a net negative 4 percent, more owners reported lower earnings than higher earnings.
A net 20 percent of owners reported plans to increase staffing, up two points. A net 35 percent of owners reported hard-to-fill job openings, up a point. A net 19 percent of owners reported plans to increase compensation in response to a tight labor market.
A net 1 percent of owners reported plans to increase inventories. At a net negative 6 percent, more owners indicated existing inventories were too high rather than too low.
Owners cited finding qualified job applicants as their most pressing problem, followed by taxes, weak sales and the cost of regulations.