What is the mood on Main Street regarding the economy? While still at an historic low, small-business confidence is edging up, according to the National Federation of Independent Business’s Small-Business Optimism Index,
The index gained 0.4 points in February to 94.3, the NFIB announced Tuesday. This marks the six consecutive months of gains, a sign, the organization said, “is a sign that the recovery is likely to continue, albeit at a glacial pace”
While the February index reading is lower than that of a year ago, it is the second highest reading since December 2007, the beginning of the recession. The components that comprise the index suggest that while small-business owners are slightly more pessimistic about the outlook for business conditions, they are more optimistic about future sales growth.
The NFIB calls the reading “a mixed bag.” “The good news for small-business owners and those watching the economy is that things are getting better,” noted NFIB chief Economist Bill Dunkelberg. “The price of gasoline is a wild card, and rising energy costs will weigh heavily on the minds of small firm owners.”
The nation’s roughly 27.5 million small businesses employ more than half the nation’s workers and create 60 percent to 80 percent of the new jobs in the nation, according to the U.S. Small Business Administration.
Confidence in the economy remains “fragile,” the NFIB finds. Twenty-two percent of small-business owners report “poor sales” as their top business problems, unchanged from January. Job creation, though, showed a “vast improvement.” The net change in employment per firm seasonally adjusted was 0.11, up from January’s “0” reading. The percent of owners reporting hard to fill job openings fell 1 point to 17 percent, the best reading since September 2008.
But the net percent of owners planning to create new jobs feel 1 point to 4 percent, the third consecutive monthly decline. In a decent economic expansion, job creation plans would be in double digits, NFIB observes.
Capital spending outlays over the past six months rose 2 points to 57 percent, building on gains posted in December and January.
The net perent of owners expecting higher real sales gained 2 points to a net 12 percent, which is 2 points below a year ago. Reports of positive earnings trends gained 5 points in February, rising to -19 percent, the best reading since October 2007.
The index is based on the responses of 819 randomly sampled NFIB members.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.