The National Federation of Independent Business reported that the Small Business Optimism Index accelerated once again, up from 106.9 in January to 107.6 in February. This edged out November’s reading (107.5) as the highest since July 1983 (108.0). Note that readings above 100 are consistent with strong growth among small business owners, and the robust data seen for much of the past year would suggest a healthy outlook overall in the economy. In that spirit, the percentage of respondents saying the next three months would be a “good time to expand” remained at 32 percent (an all-time high), and the percentage of those expecting sales to rise over the next three months increased from 25 percent to 28 percent.
In addition, the labor market remained strong. Those with positions they are unable to fill right now remained at 34 percent. Along those lines, respondents cited the quality of labor (22 percent) as the top “single most important problem,” illustrating the tightness of the job market for small businesses. Taxes and government regulations and red tape both came in second (15 percent). With that said, the net percentage planning to add workers in the next three months eased from 20 percent to 18 percent, a four-month low but still suggesting healthy growth.
Similarly, capital expenditures activity remained promising, with those investing in capital during the past six months jumping from 61 percent to 66 percent—the highest point since 2004. Those planning to make a capital expenditure over the next three to six months remained the same at 29 percent.