NFIB January Small Business Optimism: +0.9. Despite the small increase to 88.9 last month, confidence among small business owners remains near the lowest levels in this report’s 40-year history. And while expectations for business conditions did gain 5 points to -30%, this still marks the 4th lowest reading for this gauge. Rising taxes, higher health insurance costs and increasing regulations are killing confidence. The frequency of capital spending rose 3 points to 55%, a level considered ‘maintenance mode.’ This level is only slightly better than those in the great depression, and combined with a bearish outlook, cap ex will continue to muddle through 2013.
Inflation and employment shine, as 43% of owners are hiring or trying to hire. More owners reported net hiring than reductions and a lack for qualified applicants for open positions was also noted. Similarly inflation remained in check, with a net 2% of sellers raising their average prices. Unfortunately inflation remained controlled for all the wrong reasons: overcapacity and weak demand. Coupled with recently weak consumer confidence reports, this NFIB report paints a bleak picture for sustainable growth in retail sales and capital spending.