Small businesses are less anxious, NFIB finds, but suffer from uneven recovery – MarketWatch


Small businesses are less anxious, NFIB finds, but suffer from uneven recovery – MarketWatch

Economic Report Last Updated: March 9, 2021 at 10:44 a.m. ET First Published: March 9, 2021 at 6:00 a

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Economic Report

Small-business optimism index rises slightly in February

Small businesses are still laboring under the shadow of the record spike in coronavirus cases over the winter.

AFP/Getty Images

The numbers: The anxiety of small-business owners eased in February, a new survey shows, but they are still wrestling with the aftereffects of the recent coronavirus spike and an uneven economic recovery.

The closely followed optimism index compiled by the National Federation of Independent Business edged up to 95.8 last month from 95 in January.

One year ago, however, the index stood near an all-time high of 104.5. Pandemic restrictions started soon after, in March 2020.

What happened: More than half of the small businesses surveyed said they either hired or tried to hire workers last month, but many could not find suitable workers. Companies said finding enough talent was their biggest problem, even more than taxes or regulatory costs.

Few were planning to invest or increase spending given a still-high level of uncertainty about the coronavirus and the path of the economy in the next six months.

The biggest share of small businesses in 12 years, meanwhile, said they are raising prices in a potential harbinger of higher inflation. Companies have raised prices because of tight supplies. The shortages are being exacerbated by rising customer demand.

Read: The U.S. economy is ready to surge again. So is inflation.

And: Inflation worries are back. Should you worry?

The big picture: Many small businesses were dealt another blow at the end of last year after states reimposed some restrictions following a record surge in corovirus cases. Most of those restrictions are now being lifted, but it will take time for small businesses to recover lost ground.

What could help is fresh financial aid from the federal government, an increasing number of Americans being vaccinated and a decline in coronavirus cases. Business should improve in the next few months.

See: A visual look at how an unfair pandemic has reshaped work and home

What they are saying? “The economic recovery remains uneven for small businesses, especially those still managing state and local regulations and restrictions. Congress and the Biden administration must keep small businesses a priority as they plan future policy legislation,” NFIB chief economist Bill Dunkelberg said.

Market reaction: The Dow Jones Industrial Average

rose in Monday trading after the Senate passed a $1.9 trillion stimulus over the weekend. But the S&P 500

fell slightly.