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US Small Business Confidence Hampered by Uncertainty: NFIB

H.S. Borji
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US Small Business Confidence Hampered by Uncertainty: NFIB

Confidence levels among US small businesses declined in February, as growing uncertainty dampened economic expectations and impeded hiring plans.

The Business Optimism Index, courtesy of the National Federation of Independent Business, declined from 94.1 to 91.4. Economists called for a reading of 95.3 after upbeat sales expectations saw the index increase slightly the previous month. The monthly reading, which fell to a level that is generally associated with recessions and periods of suboptimal growth, raises concern about the economic outlook.

Compared to the previous month, virtually every component of the index declined or remained unchanged. Plans to increase employment fell 5 points to a seasonally adjusted net 7 percent. More than three-quarters of business owners made no net change in employment, NFIB data showed.

Two percent of owners said worker compensation declined last month, while 23 percent reported raising compensation. Overall, the compensation picture remained weak by historical standards.

On a seasonally adjusted basis, 21 percent of business owners reported higher sales, whereas 34 percent said sales declined.

“Uncertainty is a major cause of the Index’s dip,” said NFIB chief economist Bill Dunkelberg. “Lacking any progress in Washington and facing continued unknowns with the healthcare law, the EPA, the minimum wage, tax reform and more, it is no surprise that the Small Business Optimism Index fell, reversing a few months of modest gains.”

The US economy faced several hurdles last month, as inclement weather continued to weigh on small businesses. US employers added 175,000 payrolls last month, higher than forecast but well below the 2013 monthly average.

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