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Small-business optimism edges up in February

By Journal Staff

Date:

Small-business owners became slightly more optimistic in February, raising their hopes for future sales but taking a darker view of general business conditions.

Those are the results of the Small Business Optimism Index from the National Federation of Independent Business (NFIB), a small-business association with members in Washington, D.C. and all 50 state capitals. The optimism index inched up 0.4 points in February to 94.3.

The index has now posted an increase for six consecutive months. It is at its highest point since February 2011, when it registered 94.5.

However, the index’s gains have not been substantial to start 2012. February’s increase of 0.4 points comes after the index rose by just 0.1 point in January.

Business owners helped drive February’s index up with high hopes for future sales. Seasonally adjusted, a net 12 percent of survey respondents expected to generate higher sales during the next three months. That is up 2 points from January.

Survey respondents’ views of future general business conditions helped temper that optimism, though. A seasonally adjusted net negative six percent of survey respondents indicated they anticipate business conditions will be better in six months, down three points from January.

The negative survey result indicates more business owners actually expect business conditions will be worse in six months. The NFIB calculates net percentages by subtracting negative survey answers from positive answers. A positive net percentage indicates a majority of respondents were optimistic, while a negative percentage means pessimism was prevalent.

It’s encouraging that survey indicators like future sales expectations are on the rise in NFIB’s national survey, according to NFIB New York State Director Mike Durant.

 

Other survey findings

Small-business owners’ actual sales were down in February, according to the NFIB survey. Seasonally adjusted, a net negative 7 percent of business owners said sales were higher in the last three months, compared to the prior three months. That was a dip of 1 point from January.

Owners continued to cite sales as their single most important problem. In February, 22 percent of survey respondents said poor sales was their biggest problem, unchanged from January.

Hiring plans took a slight hit in February but remained positive. A seasonally adjusted net 4 percent of owners indicated they plan to increase hiring in the next three months, down one point from January.

Inventories will be on the rise in the next three to six months, according to the survey. Seasonally adjusted, a net 2 percent of business owners plan to increase their inventories, up five points from January.

Earnings improved in February, according to the index’s actual earnings-changes measurement, which gauges earnings over the last three months compared to the prior three months. Still, more business owners cited lower earnings than higher earnings, with a seasonally adjusted net negative 19 percent reporting higher profit. That’s up from a net negative 24 percent last month.

Small-business owners continued to make plans for capital expenditures. Seasonally adjusted, 23 percent of survey respondents said they planned capital expenditures in the next three to six months, down from 24 percent last month.

The NFIB randomly surveyed 819 of its members in the month of February to develop the Small Business Optimism Index.

The NFIB will issue the Small Business Optimism Index results for March on April 10. 

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