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  • Optimism grows among small-business owners

    A positive attitude shown by small-business owners toward the economy is on the rise.

    There's growing optimism in March amongst small-business owners.The Small Business Optimism Index climbed 2 points to 93.4, countering the downturn seen during February when optimism fell amongst entrepreneurs and industry professionals.

    The National Federation of Independent Business, a nonprofit group that puts forth a monthly survey of small-business owners' plans and opinions, reported that six of the Index' 10 components improved. Two went unchanged and two were lower than last month.

    The 93.4 optimism rating showed the state of small-business owners is moving in the right direction, but Bill Dunkelberg, the NFIB chief economist, would still like to see the Index rise past 95 points.

    "Overall, the March gain more or less reversed the February decline," Dunkelberg said. "While the Index still can't seem to get above 95, we can be encouraged that the economy is at least crawling forward and not heading in reverse."

    The 10 components of the Index
    The six components that small-business owners felt more positively about included: plans to increase inventories, current inventory, expected improvement in the economy, expected real sales higher, now is a good time to expand and earning trends. The two components that remained flat were current job opening and expected credit conditions. The pair of factors that small-business owners viewed as worse than the previous month were plans to increase employment and plans to make capital outlays.

    Employment statistics looking stronger
The NFIB reported small-business owners increased their employment and hiring by an average of 0.18 workers per firm in March, an improvement from the 0.11 reading in February. The gain in March marks the sixth straight month that small-business owners are adding to their workforce.

    More than one in five of all small-business owners reported job openings they could not fill in the current period, which was unchanged from February, and 13 percent reported using temporary workers.

    Nearly half of all small-business owners hired or tried to hire in the last three months, while 41 percent reported few or no qualified applications for open positions.

    The Southwest, West and Florida were all areas that are producing jobs at a fast pace. Those are also regions that weren't impacted by the harsh winter weather. The NFIB reported that as spring gets underway, the country will have a better grasp of the strength of the labor market.

    Sales figures
    Weak sales totals are still a major problem for many small-business owners. According to the NFIB report, 14 percent of owners cite weak sales as their top business problem. While that's considered a high total, it's actually starting to approach normal levels seen before the burst of the housing bubble and ensuing recession.

    The expected real sales volumes recorded a robust 9 point gain, increasing to a net 12 percent of owners, which is a solid improvement despite the views of future business growth being relatively negative among business owners.

    "The outlook for real sales gains accounted for about half of the improvement with inventory satisfaction and inventory investment plans accounting for most of the rest," Dunkelberg said. "However, throughout this recovery we've seen these types of increases only to have them go nowhere. As long as Washington continues to ignore policies that could restore the middle class, job creation will continue to be sub-par."

    The inflation roller coaster
    The NFIB revealed that 12 percent of small-business owners reduced their average selling prices in the last three months, while 23 percent reported increasing their prices.

    Only 3 percent plan reductions, which is far fewer than the actual reported reductions, meaning some small businesses are slashing prices in order to make sales.