Confidence among small businesses rose in February as owners shrugged off a tightening in fiscal policy and raised plans to increase capital spending and restock their warehouses.
The National Federation of Independent Business said on Tuesday its optimism index increased 1.9 percentage points to 90.8 last month, continuing to recover from a 2-1/2 year plunge in November.
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The improvement in sentiment came even as small businesses braced for about $85 billion in across the board government spending cuts that started to take hold on March 1.
A two percent payroll tax cut expired on January 1 and tax rates for wealthy Americans went up.
Capital spending plans gained four points, while plans to increase inventories climbed six points last month. The share of owners viewing inventories as too low rose two points.
Owners' outlook for business conditions in the next six months also improved two points.
Their perceptions of labor market conditions also improved, with the modest gains in the shares of owners planning to add jobs and those saying job openings were hard to fill.
Small business owners' views of sales and credit conditions also improved last month.
(Reporting by Lucia Mutikani; Editing by Neil Stempleman)