Small entrepreneurial companies— the lifeblood of the high-tech business—aren’t feeling confident enough to hire new employees, according to the National Federation of Independent Business (NFIB), a small-business advocacy organization.
A February survey of small business owners showed an increase in optimism – the NFIB index moved up 1.9 points to 90.8 from 88.9 in January-- but not enough to spur hiring.
"While the Fortune 500 is enjoying record high earnings, Main Street earnings remain depressed," said NFIB chief economist Bill Dunkelberg. "Far more firms report sales down quarter over quarter than up."
Small business optimism is being tempered by concerns over issues such as US government sequestration and the national debt. “Washington is manufacturing one crisis after another—the debt ceiling, the fiscal cliff and the sequester,” Dunkelburg said. “Spreading fear and instability are certainly not a strategy to encourage investment and entrepreneurship. Three-quarters of small-business owners think that business conditions will be the same or worse in six months.” \
Even though the Index gained almost 2 points last month, the news wasn’t good enough, he said. “Until owners’ forecast for the economy improves substantially, there will be little boost to hiring and spending from the small business half of the economy.”
Government procurement practices require a certain portion of the government’s spend be directed toward businesses owned by women, minorities or veterans. Many of these businesses are small privately held operations.
Weak sales are still the top business problem for 18 percent of small business owners, the NFIB reported. The net percent of all owners reporting higher nominal sales over the past three months was unchanged in February, at a seasonally adjusted negative 9 percent. There are still far more owners reporting declining sales than reporting positive sales trends.
The NFIB Index’s slight increase followed the Dow Jones Industrial average reaching an all-time high this week and a strong employment report. The economy created a net 236,000 new jobs and the unemployment rate fell to 7.7 percent.
