"By Michael S. Derby
Confidence levels among the U.S.’s small business operators remains low, according to the report released Tuesday.
The National Federation of Independent Business index of small business optimism dropped 1.6 points last month, to a reading of 81.0.
Despite the lost ground, the report said, with retail sales, housing starts and auto sales showing signs of stabilizing and with stocks on the rise, “there are signs that the economy may have bottomed.” That said, small business owners are “skeptical” and are unwilling to invest or hire until they see more evidence the economy is improving.
The report noted that in March, small businesses cut workers, but not as many as in February. Still, first-quarter job cuts were the worst in the survey’s history.
More companies cut prices than raised them, with 34% of respondents reporting lower selling prices, and 13% saying that they’d bumped up sticker prices.
“Pricing power has vanished and reports of sales declines are at record high levels in part because of widespread price cuts,” the report said. That’s cutting into worker compensation too, the report said.
But the report notes that this rapid cost cutting “is likely being overdone,” which could mean “a rapid improvement in employment and earnings once the economy establishes a forward momentum.”
The NFIB report said that borrowing by small businesses remained nearly typical levels, with the net percentage of those reporting all borrowing needs had been met coming in at 19% of respondents, down 5% from February."