JEFFERSON CITY, Mo. – The National Federation of Independent Business’ index of Small Business Optimism has fallen to its lowest reading in two years. In February, six of the 10 indices appeared to be declining and four remaining unchanged.

According to a news release, the overall index dropped one point last month and now stands well below the 42-year average of 98 at 92.9.

decreasing arrow

While state-specific data isn’t available, state director of NFIB/Missouri, Brad Jones, said the national trends are reflected here.

“The survey shows that a lot of small-business owners are afraid we’re on the wrong track,” he said. “If you own your own business, you’re not going to invest in new equipment or jobs unless you think the market is strong enough.”

NFIB’s chief economist, William C. Dunkelberg, said, “A ho-hum outcome this month confirms that the small business sector is not performing with any strength. Small business owners are still waiting for a good reason to invest in the future.”

According to the report, spending and hiring plans weakened a bit as expectations for growth in real sales volumes fell. Earnings trends also weakened as owners continued to report widespread gains in worker compensation while holding the line on price increases.

More firms reduced prices than raised them, a sign that small businesses are finding ways to absorb higher labor costs without affecting consumers.

Sales trends have moved down over the past few months, a trend that continued in February. Expectations for future business conditions remained very negative, which indicates that small business owners do not plan to increase hiring or capital spending.

And lastly, the political climate continued to be the second most frequently cited reason for reluctance to expand.

“Political uncertainty remains a major concern, and the president does not seem inclined to address the major concerns of small business owners,” said Dunkelberg. “Every month, the Fed dithers on interest rate policy, giving the impression that the economy is weak. All this generates uncertainty, the enemy of spending and hiring behavior that would move the economy forward at a faster pace.”

NFIB’s monthly Small Business Economic Trends survey is based on a monthly survey of small businesses. The survey was conducted in February, reflecting the response of 756 small businesses. For more information, or to download a copy of the full report, go to www.NFIB.com/sbet.