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Small biz index holds steady
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March 15, 1999: 3:53 p.m. ET
Measure of optimism stays unchanged, signaling growth through mid-year
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NEW YORK (CNNfn) - Small business optimism held steady in February, pointing to continued economic growth through mid-summer.
According to the latest report from the National Federation of Independent Business' Education Foundation, which tracks economic trends among small companies, the Small Business Optimism Index dipped only a tenth of a point from January's 100.6 reading.
The NFIB's Small Business Optimism Index is a 10-component measure of the economic health, plans, and expectations of America's Main Street business owners.
Slight declines in half of the components were nearly offset by smaller increases in three categories and a substantial jump in reports of improved earnings. Capital spending plans remained at the strong level recorded in January.
Hiring plans retreated two points, to a net 15 percent. It was the second straight monthly decline in this figure since December, signaling a decline in the overall number of small businesses looking to expand their workforce.
Tight Labor Market
"While hiring plans have softened since last year, labor markets remain extremely tight," said William Dunkelberg, NFIB chief economist and author of the report. More than three out of every 10 small business owners reported having problems filling job openings, up slightly from January's figure. Thirty-one percent also reported increasing employee compensation.
"Small business owners are raising wages to keep the people already on board and to make open positions more attractive," said Dunkelberg. "With many small firms struggling to fill job slots, it's natural to see expansion plans being put on hold."
"What is surprising is that only 6 percent of small business owners view rising labor costs as their major concern," he added.
Dunkelberg noted that sales remained "hot" in February. Only 2 percent of respondents reported raising the price of their goods or services during the previous three months.
"Inflationary pressure is still in deep hibernation," he said. "Despite higher labor costs and a virtual absence of price hikes, earnings continue to improve on Main Street. Small firms are making significant productivity improvements as they continue to create jobs without fueling inflation."
The report is based on 595 responses to a national survey of small business owners. 
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