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The latest Small Business Optimism Index from the National Federation of Independent Businesses (NFIB) rose two points in March to 93.4, mostly reversing the February decline but failing once again to breach the 95 ceiling that has capped the Index during the recovery.
Twenty-two percent of all owners reported job openings they could not fill in the current period, and 13 percent reported using temporary workers, unchanged from February.
Job creation plans softened further in February, falling 2 percentage points to a seasonally adjusted net 5 percent (compared to 12 percent in January).
According to the survey, NFIB owners increased employment by an average of 0.18 workers per firm in March (seasonally adjusted), an improvement over February’s 0.11 reading and the sixth positive month in a row.
The report noted there could be some weather effects still in the data, but some of the best job producing areas, the Southwest and West and Florida, did not have weather problems.
“Overall, the March gain more or less reversed the February decline. While the Index still can’t seem to get above 95, we can be encouraged that the economy is at least crawling forward and not heading in reverse,” NFIB Chief Economist Bill Dunkelberg said in a statement. “The outlook for real sales gains accounted for about half of the improvement with inventory satisfaction and inventory investment plans accounting for most of the rest. However, throughout this recovery we’ve seen these types of increases only to have them go nowhere. As long as Washington continues to ignore policies that could restore the middle class, job creation will continue to be sub-par.”
Meanwhile, credit continues to be a non-issue for small employers. In March, only 5 percent of owners reported that all their credit needs were not met, 1 point above the record low.
Thirty percent reported all credit needs met, and 48 percent explicitly said they did not want a loan. Only 2 percent reported that financing was their top business problem compared to 21 percent citing taxes, 21 percent citing regulations and red tape and 14 percent citing weak sales.
Earnings trends improved 3 points to a net negative 24 percent (net percent reporting quarter-to-quarter earnings trending higher or lower). Rising labor costs are keeping pressure on earnings, the report said.
Two percent reported reduced worker compensation and 25 percent reported raising compensation, yielding a seasonally adjusted net 23 percent reporting higher worker compensation (up 4 points), the best readings since 2008.