U.S. small business optimism index falls in March

U.S. NFIB’s small business optimism index dropped in the month of March after it rose to the highest level since 1983 in February. The index fell 3 points to 104.7. The March print came in lower than market projections of a moderate fall to 107.

Of the main subcomponents, eight dropped in the month, with only labor market indicators rebounding. The falls were concentrated among those related to future performance, with expectations about a rebound in the economy, higher real sales and the belief that now is a good time to expand pulling back 11, 8, and 4 points to 32 percent, 20 percent and 28 percent, respectively. Still all three continue to be healthy relative to historical trends, noted TD Economics in a research report.

Hiring rose with the average change in employment rising to 0.36 workers per company from 0.22 in the prior month, while hiring plans and job openings also recovered.  But the supply of labor continues to be a soft spot. Almost half of businesses recorded few or no qualified workers for job openings, while quality of labor concerns continued to be high at 21 percent. Meanwhile, worries about taxes al at the lowest level since 1982.

Businesses continued to stimulate worker compensation with the share of companies doing so rising to 33 percent. Some of the increase in labor costs is being passed on down the supply chain, with share of companies raising prices sharply to 16 percent. The share of companies planning to hike worker compensation continued to be elevated at 19 percent, but is down 5 points from the almost three-decade high of 24 percent in January. In the meantime, the share of companies planning ti raise prices rose 1 point to 25 percent.

“We expect the tightening labor market, together with the more competitive tax environment and profit repatriation to support capital investment going forward”, added TD Economics.

At 20:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was neutral at -25.8651. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest