America’s Small Business Optimism Running a Record Highs

America’s Small Business Optimism Running a Record Highs

America’s Small Business Optimism Running a Record Highs

Small business optimism remained at one of its highest readings in 43 years, as small business awaits a new healthcare law, tax reform, and regulatory relief from Washington, according to the February National Federation of Independent Business (NFIB) Small Business Optimism Index, released today.

“It is clear from our data that optimism skyrocketed after the election because small business owners anticipated a change in policy,” said NFIB President/CEO Juanita Duggan.

“The sustainability of this surge and whether it will lead to actual economic growth depends on Washington’s ability to deliver on the agenda that small business voted for in November. If the healthcare and tax policy discussions continue without action, optimism will fade.”

The Index fell 0.6 pts in February to 105.3 yet remains a very high reading.

The slight decline follows the largest M-M increase in the survey’s history in December and another uptick in January. Three of the 10 components increased, 6 declined modestly, 1 was unch. Despite a small decrease, nearly 50% of owners expect better business conditions in the coming months.

“It is encouraging that the Index has persisted at 105 for 3 months in a row,” said NFIB Chief Economist Bill Dunkelberg. “Although optimism remains high, growth is still a problem because of restrictive government policies.”

The job openings component reached its highest level since December 2000, but more owners reported difficulty finding qualified workers to fill open positions.

Mr. Dunkelberg said that the scarcity of qualified workers is pressuring owners to raise compensation to retain and attract good employees, and over 25% of small business owners reported raising compensation, one of the highest readings since February 2007.

“Many small business owners are being squeezed by this historically tight labor market,” Mr. Dunkelberg said. “They are not confident enough to raise prices on consumers, which limits how much they can increase compensation and makes them less competitive in attracting qualified applicants.”

Business owners reporting higher sales improved 4%, rising to the 1st positive reading since early Y 2015. The percent of owners expecting higher real sales fell 3 pts to a net 26%. This follows a 20-pt rise in December and remains positive.

Capital spending among small business owners rose two points to 62%, the 2nd highest reading since Y 2007. Owners reported spending on new equipment, vehicles, and improvement or expansion of facilities. The percent of owners planning capital outlays slipped one point to 26%.

Now after years of ball-and-chain regulation and poor economic growth, small businesses are ready to invest.

“Small businesses will begin to turn optimism into action when their 2 biggest priorities, healthcare and small business taxes, are addressed,” said Mr. Duggan. “To small business, these are both taxes that need reform. It is money out the door that strangles economic growth.”

The US financial markets are closed this Friday for Good Friday.

Have a terrific Easter weekend.

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