Confidence inched up .4 points in February bringing the latest Index of Small-Business Optimism to 94.5, the National Federation of Independent Business reported today.
“This is not a reading that characterizes a strongly rebounding economy,” said NFIB chief economist Bill Dunkelberg, though the outlook is gradually improving.
The NFIB survey found that a long-period of price cutting appears to be ending with a growing percentage of small businesses reporting that their inventories were too low. Shrinking inventories indicate an end to the inventory adjustment cycle which began when consumers started saving.
“Going forward, there will continue to be upward pressure on prices as demand strengthens,” the NFIB said. “As growth improves price hikes will stick as owners try to restore profitability.”
Earnings continue to deteriorate for the majority of business owners, indicating that small businesses, typically leaders in a recovery, have not been the ones to benefit from recent increases in consumer spending, the NFIB said.
“Overall, sales trends are not yet supportive of a widespread recovery in the small business sector,” the NFIB.