Economic Snapshot: Small business optimism levels off in March

The National Federation of Independent Business Small Business Optimism Index slipped 0.6 points to 104.7 in March. The small business optimism index remains strong and at record-high levels, despite the slight decline this month.

“Small business owners remain optimistic about the future of the economy and the direction of consumer confidence,” said NFIB President and CEO Juanita Duggan. “We are encouraged by signs that optimism is translating into economic activity, such as capital investment and job creation.”

The indexes measuring actual earnings, capital expenditure plans and job creation plans posted gains in March. Sales expectations, which had been on the rise for months, dropped 8 points. The NFIB says this is a sign that the optimism index could be moderating after its strong run.

“By historical standards, this is an excellent performance, with most of the components of the index holding their gains,” said NFIB Chief Economist Bill Dunkelberg. “The increases in capital expenditure plans and actual earnings are signs of a healthier economy, and we expect job creation to pick up in future months.”

However, the uncertainty index significantly increased to 93 in March, the second-highest reading in the survey’s history.

“More small business owners are having a difficult time anticipating the factors that affect their businesses, especially government policy,” said Dunkelberg.

Most of the March data were collected before Congress failed to pass a bill repealing and replacing the Affordable Care Act. A big reason for the soaring optimism of the past five months is the expectation among small business owners that Congress and the new administration would reverse Obamacare and other burdensome policies.

“The April data [due out in May] will tell us much more about how small business owners are processing the events in Washington,” said Duggan. “We know they have struggled under Obamacare, and that taxes are a major concern. Congress’s failure to keep its promises could dampen optimism, and that would ripple through the economy.”


The number of job openings was little changed at 5.7 million and the job openings rate was 3.8 percent on the last business day of February, the U.S. Bureau of Labor Statistics reported. Job openings increase in a number of industries, with the largest changes occurring in health care and social assistance (+73,000), accommodation and food services (+66,000), and finance and insurance (+47,000). This was offset by decreases in real estate and rental and leasing (-63,000) and mining and logging (-7,000).

The number of hires was essentially unchanged at 5.3 million and the hires rate was 3.6 percent. Hires increased in retail trade (+74,000) and mining and logging (+9,000), but decreased in federal government (-13,000).

There were 5.1 million total separations in Febrary, little changed from January, and the separations rate was 3.5 percent. Total separations decreased in health care and social assistance (-54,000), educational services (-22,000), and federal government (-6,000).

Among separation, there were 3.1 million quits in February, essentially unchanged from the previous month, and the quits rate was 2.1 percent. Quits increased in transportation, warehousing and utilities (+25,000) and mining and logging (+5,000), but decreased in health care and social assistance (-53,000), wholesale trade (-34,000) and finance and insurance (-22,000).

Employment situation

The unemployment rate declined 0.2 percentage points to 4.5 percent in March and the number of unemployed persons declined by 326,000 to 7.2 million, the U.S. Bureau of Labor Statistics reported. Both measure were down over the year.

Total nonfarm payroll employment edged up to 98,000 in March. Employment increased in professional and business services and in mining, while retail trade lost jobs.

The number of persons employed part time for economic reasons was little changed at 5.6 million in March, but was down by 567,000 over the year.

In March, 1.6 million persons were marginally attached to the labor force, little changed from the previous year. Among the marginally attached, there were 460,000 discouraged workers, down by 125,000 from a year ago.

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