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SMALL BUSINESS SPENDING PLANS ARE UP ON SPECULATION OF A BETTER BUSINESS ENVIRONMENT.

Small businesses are planning on spending more on equipment and modernization in what they see as a more favorable small business environment.

The National Federation of Independent Business maintains a “sentiment tracker” which was seen to tick up 0.1 point to 105.3 recently. The last time the gauge was seen to tick up was right after the election when business owners anticipated less regulation and more business-friendly policies. Since then, the ticker has remained virtually unchanged due to the gridlock in Washington.

In July, the trend began to pick up once more when the reading jumped by 1.6 points but went back down slightly in August.

The new positive trend suggests some changes in the economy. But while small businesses are spending, or planning on spending more on equipment, hiring plans are not among the priorities and remain at the same level. One of the main reasons for the stagnation in hiring is cited as difficulty in finding qualified workers. Business owners agree that next to taxes, finding qualified personnel is their biggest problem.

Another interesting point is that while businesses are increasing capital spending, average selling prices have also risen. The slight increase in selling prices is the highest since 2014, when plunging oil prices had a negative effect on global markets and inflation measurements.

The National Federation of Business believes that this is good news for the Federal Reserve which is trying to generate more inflation.

Some of the interesting changes to business spending plans are listed below.

  • Job creation plans down 1%

  • Capital expenditure plans up 4%

  • Inventory plans down 3%

  • Job openings down 4%

  • Expansion plans up 4%

  • Sales expectations up 5%

Though the job market doesn’t seem to benefit from the new data, over all the news is good. Business spending has long been an indicator of a good economy and job creation usually follows.