Economic Snapshot: Small business optimism drops significantly in March
The harsh winter weather continues to affect our economy, with small business optimism and housing starts both reporting disappointing numbers for March. However, builder confidence seems to be improving as the weather has warmed.
NFIB Small Business Optimism Index
The NFIB Small Business Optimism Index fell 2.8 points in March to 95.2. This is the lowest reading for the index since June 2014.
All ten components of the index weakened this month. Small business owners expecting the economy to improve contributed heavily to the decrease with a seven-point drop in March.
The percent of owners reporting an increase in employment fell five percentage points to a negative one percent. This is a significant change from the recent high of nine percent in December 2014.
Fifty percent of owners reported hiring or trying to hire, a three-point decrease, and 42 percent reported few or no qualified applicant in their open positions. Ten percent plan to create new jobs, down two percentage points from the previous month but a solid reading, according to the NFIB.
Fifty-eight percent of owners reported outlays, down two percentage points from last month. The percent of owners planning capital outlays in the next three to six months dropped two points to 24 percent. Of the 42 percent of owners who said it was a bad time to expand, 21 percent still blamed the political environment, down two points from the pervious month.
Housing starts
Privately-owned housing starts were at a seasonally adjusted annual rate of 926,000 in March, 2.0 percent above the revised February estimate of 908,000 but 2.5 percent below the March 2014 rate of 950,000.
Single-family housing starts were at a rate of 618,000 in March, 4.4 percent above the revised February figure of 592,000.
Privately owned housing completions were at a seasonally adjusted annual rate of 823,000, 3.9 percent below the revised February estimate of 856,000 and 5.8 percent below the March 2014 rate of 874,000.
Single-family housing completions were at a rate of 602,000 in March, 0.8 percent above the revised February rate of 597,000.
Housing Market Index
The National Association of Home Builders/ Wells Fargo Housing Market Index rose four points in April to 56.
All three HMI components increased this month. The component charting sales expectations in the next five months rose five points to 64. The index measuring buyer traffic jumped four points to 41. The component gauging current sales expectations increased three points to 61.
Builder confidence rose one point in the South to 56 and held steady in the Northwest at 42. The housing market index fell two points in the Midwest to 54 and dropped three points in the West to 58.
For the purposes of this index, any reading above 50 indicates more builders view conditions as “good” than “poor.”
