A monthly index tracking confidence among small business owners has edged up on reports of more unfilled job openings and plans to increase inventories.
The National Federation of Independent Business reported its Small Business Optimism Index rose a tenth of a point to 98 in February. The reading is the third highest since 2007, slightly below levels for December and November. The latest reading matches the long-term average for the index.
“In spite of slow economic activity and awful weather in a lot of the country, small business owners are finding reasons to hire and spend, which is great news,” said Bill Dunkelberg, chief economist of the NFIB.
“Large firms have been powering the economic recovery since the Great Recession, but that may be shifting to the small business sector,” Dunkelberg added. “February’s data suggests there are fundamental domestic economic currents leading business owners to add workers, and these should bubble up in the official statistics and support stronger growth in domestic output.”
The NFIB bases the index on the results of monthly surveys of members of the small business advocacy group. For February, three of 10 components of the index advanced, while four components retreated and three components remained unchanged.
The proportion of small business owners responding to the survey upon which the February index was based who reported hard-to-fill job openings rose three points to 29 percent, a nine-year high and an increase that suggests labor markets are tightening. While 12 percent of owners reported plans to increase staffing, that share was down 2 percent.
The proportion of owners who plan to increase inventories rose two points to a net 4 percent. The share of owners who expect credit conditions to ease in coming months edged up a point, but remained at a net negative 4 percent.
The proportion of owners who expect the economy to improve over the next six months slipped a point to a net negative 1 percent.
The share of owners who plan to make capital outlays over the next three to six months held steady at 26 percent. Meanwhile, 13 percent of owners said they consider now a good time to expand, also unchanged.
The proportion of owners who expect increased sales slipped a point to a net 15 percent. Reports of positive earnings trends held steady at a net negative 19 percent.