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Uncertainty tamps down small-biz optimism
WASHINGTON (3/12/14)--The Small Business Optimism Index fell by 2.7 points in February to a reading of 91.4, a number before seen in periods of severe economic downturn such as recessions or sub-par growth (NFIB March 11).

Even hiring plans, which in January's report showed promise for the New Year, took a 5-point dive.

"Uncertainty is a major cause of the index's dip," said Bill Dunkelberg, chief economist, National Federation of Independent Business, the agency that maintains the index. "Lacking any progress in Washington and facing continued unknowns with the healthcare law, the Environmental Protection Agency, the minimum wage (debate), tax reform and more, it is no surprise that the Small Business Optimism Index fell."

New job numbers in the report came in higher than originally estimated, however, unemployment still climbed a tenth of a point.

Findings also included a drop in expected real sales, likely signaling rough waters head, the index found.

"We shouldn't expect blue skies soon," Dunkelberg said.

Other indicators:
  • Labor Markets: NFIB owners increased employment by .11 workers on average.
     
  • Job creation: Twenty-two percent of owners reported job openings they couldn't fill, while 13% reported taking on temporary employees.
     
  • Sales: Sixteen percent of business owners listed "weak sales" as their top business problem.
     
  • Earnings and wages: Earnings remained at a discouraging net negative 27%.
     
  • Credit markets: Only 5% of businesses reported that all their credit needs had not been met.
     
  • Inflation: Fifteen percent of NFIB owners said they reduced average selling prices over the past three months, a 2-point increase, while 19% reported price increases, also a 2-point increase.


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