A survey by the National Federation of Independent Business (NFIB) shows that small business confidence in the United States fell in February to a two-year low, in the midst of continuing concerns over sales growth and profits that continue to disrupt capital spending and hiring strategies.
The NFIB’s Small Business Economic Trends report has found that its small business optimism index declined one point to 92.9 in February, while none of the index’s 10 components, such as “Plans to Increase Employment,” “Expect Economy to Improve,” and “Now a Good Time to Expand,” showed increases; six fell slightly, while four were unchanged from January. This follows a decrease in the index by 1.3 percentage points in January.
“Spending and hiring plans weakened a bit as expectations for growth in real sales volumes fell,” said the NFIB in a statement regarding the official survey release. “Earnings trends worsened a bit as owners continued to report widespread gains in worker compensation while holding the line on price increases.”
While 49% of respondents reported hiring or trying to hire, 42% reported few or no qualified applicants for the positions they were looking to fill. When it comes to capital spending, the percent of business owners planning capital outlays in the next three to six months fell two points in February to 23%.
Meanwhile, GDP growth estimates for the first quarter of 2016 are above a 2% rate.
The decline in confidence appears contrary to current economic indicators that largely point to strengthening activity in employment, consumer spending and manufacturing after growth slowed to a 1% annualized rate in the fourth quarter of 2016.