Historically Low Business Confidence Begins to Edge Up
The Small-Business Optimism Index gained 0.4 points in February to 94.3 marking the sixth consecutive month of gains. While still historically low, the latest increase is a sign that the recovery is likely to continue, albeit at a glacial pace. The index is lower than that of February 2011 but is the second highest reading since December 2007, the beginning of the recession. The National Federation of Independent Business (NFIB) report suggested that in February owners became slightly more pessimistic about the outlook for business conditions but more optimistic about future sales growth, making the reading mixed bag, although headed largely in the right direction.
“The good news for small-business owners and those watching the economy is that things are getting better. However, at this slow pace of growth and recovery, it could be years before we are again enjoying prosperity,” said NFIB chief economist Bill Dunkelberg. “The price of gasoline is a wild card, and rising energy costs will weigh heavy on the minds of small firm owners. The economy is holding on to tenuous gains, moving ahead in fits and starts, which, hopefully, will result in future positive growth. First quarter growth will not likely match that of the fourth-quarter 2011, but it should remain positive. In the meantime, we will crawl toward the November election to get a clearer picture of our future.”
While the fog over Main Street appears to be lifting to some degree, confidence in the economy remains fragile. Twenty-two percent of small business owners report “poor sales” as their top business problem, unchanged from January. February’s report suggests cautious optimism but shows no signs of significant economic improvement that is needed to encourage owners to invest their own money in growing their businesses.
Some other highlights of February’s Optimism Index include:
The report is based on the responses of 819 randomly sampled small businesses in NFIB’s membership, surveyed throughout the month of February. The complete survey can be downloaded by clicking here.