Research - APRIL 13, 2017

Small business optimism still strong

by Andrea Waitrovich

Since this past November, small business owners have been feeling confident about their prospects, which could lead them to take up more office and industrial space as they expand, according to the National Federation of Independent Business' latest economic trends report. Actual earnings, capital-expenditure plans and job-creation plans posted gains in March. And even though the index slipped 0.6 points to 104.7 in March, small business optimism has remained at historic highs for five consecutive months.

“Small business owners remain optimistic about the future of the economy and the direction of consumer confidence,” said Juanita Duggan, NFIB president and CEO. “We are encouraged by signs that optimism is translating into economic activity, such as capital investment and job creation.”

Sales expectations, which have been flying high for months, dropped by 8 points, a sign the Optimism Index could be moderating after a strong run.

The Uncertainty Index hit 93 in March, which is the second-highest reading in the survey’s history.

“More small business owners are having a difficult time anticipating the factors that affect their businesses, especially government policy,” said Bill Dunkelberg, NFIB’s chief economist.

Most of the March data were collected before congress failed to pass a bill to repeal the Affordable Care Act. “The April data, due out in May, will tell us much more about how small business owners are processing the events in Washington,” noted Duggan.

At 5.7 million in February, the number of job openings was little changed from January, and the job openings rate was 3.8 percent on the last business day of February, the U.S. Bureau of Labor Statistics reported.

Job openings increase in a number of industries, with the largest changes occurring in healthcare and social assistance (+73,000), accommodation and food services (+66,000), and finance and insurance (+47,000). This was offset by decreases in real estate and rental and leasing (–63,000), and mining and logging (–7,000).

The number of hires was unchanged at 5.3 million, and the hires rate was 3.6 percent. Hires increased in retail trade (+74,000), and mining and logging (+9,000), but decreased in federal government (–13,000).

There were 5.1 million total separations in February, little changed from January, and the separations rate was 3.5 percent. Total separations decreased in healthcare and social assistance (­–54,000), educational services (–22,000), and federal government (–6,000).

Among separation, there were 3.1 million quits in February, essentially unchanged from the previous month, and the quits rate was 2.1 percent. Quits increased in transportation, warehousing and utilities (+25,000), and mining and logging (+5,000), but decreased in healthcare and social assistance (–53,000), wholesale trade (–34,000), and finance and insurance (–22,000).

The unemployment rate declined 0.2 percentage points to 4.5 percent in March, and the number of unemployed persons declined by 326,000 to 7.2 million, according to the U.S. Bureau of Labor Statistics.

Total nonfarm payroll employment was up to 98,000 in March. Employment increased in professional and business services, and in mining, while retail trade lost jobs.

The number of persons employed part time for economic reasons was little changed, at 5.6 million in March, but was down by 567,000 over the year.

In March, 1.6 million persons were marginally attached to the labor force, little changed year-over-year. Among the marginally attached, there were 460,000 discouraged workers, down by 125,000 from a year ago.

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