The February NFIB Small Business Optimism report was released today, March 14, 2017. The headline of the Small Business Economic Trends report is “Small Business Owners Continue To Have High Expectations For Washington.”
The Index of Small Business Optimism decreased .6 points in February to 105.3.
Here are some excerpts that I find particularly notable (but don’t necessarily agree with):
Business owners reporting higher sales improved four percentage points, rising to the first positive reading since early 2015. The percent of owners expecting higher real sales fell three points to a net 26 percent. This follows a 20-point rise in December and remains positive.
Capital spending among small business owners rose two points to 62 percent, the second highest reading since 2007. Owners reported spending on new equipment, vehicles, and improvement or expansion of facilities. The percent of owners planning capital outlays slipped one point to 26 percent. Duggan said after years of ball-and-chain regulation and poor economic growth, small businesses are ready to invest.
“Small businesses will begin to turn optimism into action when their two biggest priorities, healthcare and small business taxes, are addressed,” said Duggan. “To small business, these are both taxes that need reform. It is money out the door that strangles economic growth.”
Three percent of owners reported that all their borrowing needs were not satisfied, down 1 point. Thirty percent reported all credit needs met (down 1 point), and 52 percent explicitly said they did not want a loan. However, including those who did not answer the question, uninterested in borrowing, 67 percent of owners have no interest in borrowing. Record numbers of firms remain on the “credit sidelines”, seeing no good reason to borrow yet, in spite of the surge in optimism. As optimism is translated into spending plans, borrowing activity should pick up. Only 2 percent reported that financing was their top business problem compared to 22 percent citing taxes, 15 percent citing regulations and red tape, and 17 percent the availability of qualified labor. Weak sales garnered 12 percent of the vote.
Here is a chart of the NFIB Small Business Optimism chart, as seen in the March 14 Doug Short post titled “NFIB Small Business Survey: Optimism Remains High in February“:
Further details regarding small business conditions can be seen in the full February 2017 NFIB Small Business Economic Trends (pdf) report.
The Special Note summarizes my overall thoughts about our economic situation
SPX at 2364.97 as this post is written