Small-Business Optimism Rises

With firms looking to increase hiring, optimism among small-business owners edged slightly higher in the beginning of 2014, according to new data from the National Federation of Independent Business (NFIB).

The NFIB optimism index increased 0.2 points over January’s reading to hit 94.1 in February, the third straight monthly advance. In another important metric, small-business owners’ expectations about their own sales have risen seven points on NFIB’s scale since December.

The NFIB survey echoes the outlook of ad specialty distributors, as the most recent Counselor Confidence Index, a metric that gauges distributor outlooks which Counselor produces quarterly, improved to 113.2 in the fourth quarter, reaching its highest point since being introduced a year ago.

“It’s a really interesting net increase in business owners thinking real sales are going up, and it’s good news, because they ultimately think the economy is going to be better,” said NFIB chief economist Bill Dunkelberg.

Depending on the data category, sentiment is mixed, however. Job creation plans, NFIB data shows, are at their strongest level since 2007, with 12% of small-business owners planning to add positions in the next three months. Conversely, business owners also believe their current inventories are too high, a potential concern.

“Capital spending numbers are also going down, and only 8% of firms think now is a good time to expand,” said Dunkelberg.

Among the 10 components of the NFIB’s gauge, three increased in January, five fell and two were unchanged. The index remained lower than an average reading of 100 before the recession of 2008 and 2009. The NFIB January index is based on responses from 1,884 NFIB members