Optimism Among U.S. Small Businesses Increases Further in March -- NFIB
April 13 2021 - 5:42AM
Dow Jones News
By Xavier Fontdegloria
Optimism among small-business owners in the U.S. continued to
rise in March on the back of the passage of the American Rescue
Plan and the easing of Covid-19 restrictions in many states.
The NFIB Small Business Optimism Index came in at 98.2 in March,
up 2.4 points from the previous month, data from a survey compiled
by the National Federation of Independent Business showed
Tuesday.
The reading, which is in line with the 98.5 expected by
economists polled by The Wall Street Journal, is the first return
to the average historical level since last November.
March posts the second straight month of increases for the
index. However, it is still below the 104.5 level registered in
February 2020, before the pandemic first hit the U.S.
"Main Street is doing better as state and local restrictions are
eased, but finding qualified labor is a critical issue for small
businesses nationwide," NFIB Chief Economist Bill Dunkelberg
said.
The NFIB is a monthly snapshot of small businesses in the U.S.,
which account for nearly half of private sector jobs. Economists
look to the report for a read on domestic demand and to extrapolate
hiring and wage trends in the broader economy.
Seven of the 10 components that form the index improved and
three declined compared with the previous month.
The rise in the optimism index was driven by an improvement on
sales expectations over the next three months, although the
component remained at a historically low level.
The number of owners who think it is a good time to expand also
increased, as well as job creation plans.
Forty-two percent of owners reported job openings that could not
be filled, a record high reading. "Owners continue to have
difficulty finding qualified workers to fill jobs as they compete
with increased unemployment benefits and the pandemic keeping some
workers out of the labor force," Mr. Dunkelberg said.
The percentage of owners who expect better business conditions
over the next six months, easier credit conditions and plan
inventory investment also grew, the data showed.
Earnings trends over the past three months declined four points
to a net negative 15% of owners reporting higher earnings compared
with the prior period. "Consumers have yet to spend their stimulus
checks, most of which will probably be saved," the report said.
The number of small-business owners who plan to make capital
outlays decreased by three points to 20%, and 3% of those surveyed
view current inventory stocks as too low in March, down two points
from February but remaining at historically high levels. "This
should produce historically strong demand for additional
inventories and supplies--unless the economic outlook does not
support more investment," the report said.
Of owners surveyed, 24% selected the quality of labor as their
top business problem, followed by taxes and government
regulation.
The NFIB Uncertainty Index increased six points to 81 as
respondents were most uncertain about if it is a good time to
expand their business and make capital expenditures in the coming
months.
"Apparently, owners remain hesitant, still navigating the health
crisis and are not encouraged by the Administration's spending and
tax plans," Mr. Dunkelberg said.
Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com
(END) Dow Jones Newswires
April 13, 2021 06:27 ET (10:27 GMT)
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