Small business optimism is growing but continues to be stunted by inflation and lingering concerns that a recession is imminent, according to the National Federation of Independent Business.
The NFIB’s optimism index increased by 0.6 points to 90.9 in February, the 14th straight month that it has been below the 49-year average of 98. Twenty-eight percent of owners said inflation was their No. 1 operating challenge, up two points from January but nine points lower than last July’s record reading.
Owners expecting better business conditions over the next six months fell two points to a net negative 47 percent. The net percent of owners raising average selling prices fell four points to a net 38 percent. The net percent of owners expecting real sales to rise increased 5 points to a net-negative 9 percent.
There are diverging views on the possibility of a recession. UMB Chief Investment Officer KC Mathews said a ‘job-full,’ mild recession could begin in the second half of this year during a March 8 BankBeat webinar. In February, Goldman Sachs downgraded its odds of a recession to 25 percent from 35 percent. The Wall Street giant revised its outlook after the government announced that 517,000 jobs had been created in January, nearly three times the number forecast.
The job market remained tight last month. Forty-seven percent of owners in the NFIB survey reported having job openings they could not fill in the current period, up two points from January. Ninety percent of firms hiring or trying to hire reported having few or no qualified applicants, up two points from January. Sixty percent of small businesses reported hiring or trying to hire last month, an increase of three points from January. “The difficulty in filling open positions is particularly acute in the transportation, services and construction sectors,” NFIB said. “Openings are lowest in the finance sector.”
A net 17 percent plan to create jobs in the next three months. Sixty percent reported making capital outlays in the last six months, up one point from January. Of those, 40 percent invested in new equipment, twenty-six percent bought vehicles and 18 percent improved or expanded facilities.