Tuesday, March 11, 2014

Small Business Optimism Declined in February

The NFIBs Small Business Optimism index declined to 91.4 in February from 94.1, its first decline in four months. February’s decline was broad based, with six of the ten sub-indices dropping. The winter weather seemed to adversely affect the index.

Financing continues to be the least cited concern holding back small business conditions, with 2% of respondents citing it as the single more important problem. Government requirement and red tape jumped to the top spot, but still dropped 1 % to 21%. Poor sales and the quality of labor concerns rose a combined 5% from the month prior as the largest problem facing small businesses.

The details of the report were weak. Six of the ten index components turned negative, declining a combined 30%. The outlook for real sales took the biggest hit, dropping 12 points to 3%. Small businesses are also pessimistic about the economy improving, as the expectations for the economy to improve sub-index dropped 8 points to a more negative reading of -19%. Only plans to make capital outlays increased, by 1 point to 25%.

Current job openings remained the same as the previous month, showing no improvement. Job creation plans drooped 5 points and employment gains were weak. Firms hired an average 0.11 workers in February.

The data points to a steady unemployment rate and a mid 2% GDO growth rate in 2014.

Read the NFIB report.

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