Small Business Optimism Drops for First Time in Six Months

Press Release

House Small Business Committee Chairman Sam Graves (R-MO) today issued the following statement on the March National Federation of Independent Business (NFIB) Small Business Optimism Index. The Index fell by almost 2 points in March, down to 92.5 after February's 94.3 and six consecutive months of gains. The report showed that small business owners' expectations for sales and profits fell, along with any plans to hire more workers.

"The March NFIB Index report sheds some light on why we saw a weak unemployment report from the Bureau of Labor Statistics last Friday. This should be a reminder to Washington that despite the winter's more promising economic data, we still have work to do to help provide an environment for a strong recovery. Due to many of the President's policies, unemployment has been too high for too long, the nation's debt is out of control, and gas prices are rising; we cannot ignore these realities.

"In order to address the pessimism felt by small businesses, we must provide more stability and relief on issues like taxes, regulations, energy costs, and government spending. In the coming months, our Committee will take a close look at these issues and how they relate to small businesses. Congress faces important decisions this year that will have a big impact on small business optimism and their certainty about what the economic future holds; it is important to keep this in mind as we make decisions in Washington."

Highlights of The March NFIB Optimism Index Report:
* Sales and Earnings: Owners reporting higher nominal sales over the past three months (seasonally adjusted) gained a surprising 8 points, rising to a net 1 percent, and providing the best reading since December 2007. However, even with the improvements in retail sales in recent months, 22 percent of owners surveyed still reported "weak sales" as their top business problem.
* Capital Expenditures: The frequency of reported capital outlays over the past six months fell 5 points to 52 percent, a reversal of the gains made during the two months prior. Of those making expenditures, 36 percent reported spending on new equipment (down 4 points), 20 percent acquired vehicles (down 3 points), and 13 percent improved or expanded facilities (unchanged).
* Job Creation: The net change in employment per firm seasonally adjusted was 0.22, far above January's "0" reading. Seasonally adjusted, 10 percent of the owners added an average of 3.1 workers per firm over the past few months, and 13 percent reduced employment an average of 2.1 workers per firm.
* Credit Access: Only four percent cited financing as their top business problem, compared to 20 percent citing taxes and 19 percent citing unreasonable regulation. Ninety-two (92) percent reported that all their credit needs were met or that they were not interested in borrowing.

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