U.S. small business confidence shows little improvement in Feb

NFIB's small business optimism index remained little changed in Feb, edging up 0.1 points and landing at 98.0. Today's reading fell short of expectations, with the median consensus forecast calling for a more pronounced rise in the index to 98.9.

Three out of the index's ten subcomponents rose on the month, four declined and three remained unchanged. Feb marked the second consecutive monthly decline in both the hiring intentions and sales outlook.

TD Economics notes in a report on Tuesday:

• Despite the expectations of a stronger rebound in Feb, the print on the NFIB's small business confidence was somewhat disappointing, suggesting that U.S. small and medium businesses were not overly upbeat. It is hard to blame them, with February bringing severe snowstorms and harsh winter weather to many states, leading to temporary closures and slower consumer traffic.
  
  
• As such, we expect that business sentiment will show a stronger improvement in March. After all, aside from the temporary weather disruptions, small and medium businesses have a handful of things to be happy about. Chief among them is the improving labor market and low gasoline prices, which bode well for consumers' income and consequently future sales.
  
  
• It is hard to ignore the elevated share of firms reporting hard-to-fill job openings, which is at the highest level in nine years. This result further highlights the robust job creation and increasing tightness in the labor market, with unemployment rate falling to 5.5% in February. Several large retailers have recently announced pay increases, and today's data suggests that increasing competition for workers may soon prompt small and medium firms to follow suit.