The National Federation of Independent Business’s gauge of small-business optimism fell by nearly three points in March, reflecting lower expectations that the economy will improve despite the Republican tax cuts.
The federation said its index of small-business optimism dropped to 104.7 last month from 107.6 in February, missing economists’ expectations of a reading of 107.0.
Of the index’s 10 components, only two — plans to increase employment and current job openings — showed an increase. Small business owners expecting better business conditions fell 11 points to a net 32% and expected higher sales fell to a net 20%.
But NFIB Chief Economist Bill Dunkelberg noted that expected sales and expected business conditions fell “from historically high levels and this still left the overall index reading among the 20 best in survey history.”
“Hiring and spending on new buildings and land acquisition remained at strong levels, a good sign of confidence in economic prospects,” he added.
For the first time since 1982, taxes received the fewest number of votes from survey respondents as the number one problem. Small business owners reported a seasonally-adjusted average employment change per firm of 0.36 workers, one of the best readings in survey history, but 21% cited the difficulty of finding qualified workers as their main problem, exceeding the percentage citing taxes or regulations.
Almost 90% of respondents hiring or trying to hire reported few or no qualified applicants for their open positions. “The availability of qualified workers will undoubtedly moderate actual job growth, even if the labor force participation rate picks up again,” the NFIB said.
According to MarketWatch, the small-business lobby “was delighted with the 2017 tax cuts, but concerns about fundamentals may have reasserted themselves since then.”
But the NFIB said the “big picture remains solid, with small firms as optimistic, and inclined to spend and hire as they have ever been. Tax cuts will start to impact firms directly and positively impact their customers. Economic growth will continue to be strong and that will spur more capital investment and hiring on Main Street.”