Small business owner confidence cooled last month, according to a new report from the National Federation of Independent Business (NFIB). Specifically, the headline optimism index fell to 104.7 in March, the lowest headline reading since October and a much larger drop than expected following the near-record high hit in February. Under the hood, eight of the ten main components that make up the sentiment gauge deteriorated last month, with most of the weakness seen in surveyed owners’ outlooks for the U.S. economy. That could be related to concerns about rising inflation pressures and the knock-on effects of a potential trade war.
As for small business employment conditions, job creation remained elevated in March, and the number of vacant positions matched the highest level of the current business cycle. Worker compensation, though, jumped last month, which means continued strain on margins and is not too surprising with 47 percent of surveyed owners still complaining about there being few or no qualified applicants for job openings. Moreover, quality of labor was once again the top-cited problem facing surveyed owners, as concerns about taxes and government regulation continue to abate. NFIB chief economist William C. Dunkelberg added that “Tax cuts will start to impact firms directly and positively impact their customers. Economic growth will continue to be strong and that will spur more capital investment and hiring on Main Street.”
Sources: NFIBPost author: Charles Couch