US: Small business confidence retreats in March - Wells Fargo

Analysts from Wells Fargo, point out that the decline in the Small Business Optimist index came from the second-highest reading. They noted that only 20 times in the past 432 surveys has the overall index been higher.

Key Quotes: 

“The National Federation of Independent Business (NFIB) Small Business Optimism Index fell 2.9 points to 104.7 in March. While the decline left the index at a very high level, just 2 of the index’s 10 components rose during the month, with plans to increase employment rising 2 points and current job openings rising 1 point. The net percentage of owners expecting the economy to improve fell 11 points to 32 percent, and those expecting higher real sales fell 8 points to 20 percent, creating the largest drags on the index.”

“Small business owners apparently sense some headwinds amid the recent volatility in the financial markets and intensifying trade debate. The drop in expectations comes from some fairly lofty levels.”

“Higher worker compensation was reported by a net 33 percent of respondents, which is the highest level since May 2000.”

“The inability to find qualified workers is becoming a problem for more businesses and may be impacting owners’ assessments of future sales and earnings. For the third consecutive month, the quality of available workers topped all other concerns as the most important problem for small business owners.”

“We expect capital spending to remain strong, as firms position themselves to benefit from stronger economic growth and improving pricing power. The share of small business owners raising prices rose 3 percentage points in March to 16 percent, and 25 percent of small businesses plan to raise prices this year.”