Inflation Fears Dent Small Business Optimism: Survey
After six months of rising optimism, small business owners came back to earth in March, expressing concerns with inflation and rising prices in the National Federation of Independent Business’ latest Small Business Optimism Index survey.
The index fell nearly two points in March from February, when it was at its highest point in the past 12 months.
Even as the stock market continued to rise and unemploymentcontinued to decline in March, business owners were not cheered by the numbers.
“One could have hoped it could keep going up,” William Dunkelberg, NFIB’s chief economist, told CNBC.com. Business owners remained subdued, he said, because “nothing has happened to make people feel good about the future.”
Nine of the 10 components in the index went down in March; business owners expressed pessimism in the areas of job creation, expectation of higher sales, easing of credit conditions, and earnings. The only area in which optimism increased was with inventories, which are low. As consumer confidence remains unsteady, businesses are keeping inventories in check.
Dunkelberg said that the March report mirrors the one from March 2011, “and not in a good way.”
Like last year, after a few months of gains, optimism faded as the economy continued to sputter.
But unlike in 2011, current concerns among the 757 respondents to the March survey include fears of inflation , as well as the perennial concerns of taxes and regulations. In addition, 21 percent of owners surveyed plan to raise their selling prices in the coming months.
While reports of actual hiring made March the best for job creation in a year among those surveyed, future job creation remains in doubt. Finding qualified workers for openings remains a challenge, owners report, and the percentage of owners planning to increase employees declined in March.
Dunkelberg said uncertainties about the economy continue to affect the mood of business owners, as well as the fact that decisions with the health-care bill and tax cuts remain up in the air. And even though people may have stopped worrying about Europe, “it remains a huge uncertainty, as well.”
“It’s getting to be an old story,” he said. “We need consumers to get excited, so they’ll spend money, and then we’ll hire.”