Optimism waned among small-business owners in March, according to a monthly survey showing that owners who had been warming to their future prospects suddenly took a less rosy view of future hiring and sales. The Small Business Optimism Index from the National Federation of Independent Business (NFIB) slipped 1.8 points in March to 92.5. The […]
Optimism waned among small-business owners in March, according to a monthly survey showing that owners who had been warming to their future prospects suddenly took a less rosy view of future hiring and sales.
The Small Business Optimism Index from the National Federation of Independent Business (NFIB) slipped 1.8 points in March to 92.5. The decline halted six consecutive months of increasing optimism among small-business owners.
The index remains higher than the 88.1 it notched in August 2011, the month before it started its six-month climb. However, nine of the index’s 10 components fell in March.
Future hiring plans represented one of the largest component declines. The seasonally adjusted net percentage of survey respondents who plan to increase hiring in the next three months fell 4 percentage points to 0 percent.
The net percentage of owners who expect higher sales during the next three months also fell by 4 points. A seasonally adjusted net 8 percent of owners expect higher sales, according to the NFIB’s survey.
New York director’s comments
Increases in gas and commodity prices threaten to derail what had been a fairly strong start to 2012, according to NFIB New York Director Mike Durant. The price of gas in particular is a cause for concern, he says.
“It impacts everything as it relates to small business,” he says. “It impacts the price of shipping goods. It impacts consumers and their ability to have discretionary income. It’s a whole host of issues.”
New York NFIB members are cautious, Durant says. He called this year’s state budget the second in a row with “responsible spending,” but expressed apprehension at state legislative rumblings about a potential minimum-wage increase.
“And sales are starting to stagnate,” he says. “Business owners have reasons to have concerns.”
Other survey findings
Earnings continued to struggle, according to the survey’s earnings-changes measurement, which compares earnings over the last three months to the prior three months. A seasonally adjusted net -23 percent of survey respondents reported higher earnings, down 4 points from last month.
That negative survey result indicates more business owners reported lower earnings than higher earnings. The NFIB calculates net percentages by subtracting pessimistic, or lower, survey answers from optimistic, or higher, answers. A positive net percentage indicates a majority of respondents were optimistic, while a negative percentage means a majority were pessimistic.
The share of business owners who view the next three months as a good time to expand fell 1 point to 7 percent, seasonally adjusted. The portion expecting credit conditions to improve over the next three months also fell 1 point, settling at a net -11 percent in March.
Fewer owners reported hard-to-fill job openings, which can indicate that the unemployment rate is likely to rise, according to the NFIB. In March, a seasonally adjusted 15 percent of small businesses said they had positions they were unable to fill, down 2 points from February.
Business owners expect business conditions will deteriorate over the next six months. Seasonally adjusted, a net -8 percent of survey respondents anticipate better conditions six months from March, down 2 points from the previous month.
Owners will not be increasing their inventories in the next three to six months, according to the survey. Seasonally adjusted, a net 0 percent of owners said they plan to increase inventories, a decline of 2 points from last month.
In fact, inventory satisfaction was the only optimism-index component that increased in March. Satisfaction with inventories increased to a seasonally adjusted net 3 percent, up 1 percent.
Poor sales remained the problem most often cited by small-business owners. In March, 22 percent of owners said poor sales were their single most important problem, the same percentage as the prior month.
Actual sales, which are not part of the NFIB optimism index but are tracked as part of its monthly survey, broke into positive territory in March. Seasonally adjusted, a net 1 percent of owners reported higher sales in the last three months when compared to the previous three months. That’s up 8 points from February.
The NFIB randomly surveyed 757 of its members in March to develop the Small Business Optimism Index.