Small business owner confidence softened last month, according to a new report from the National Federation of Independent Business (NFIB). Specifically, the headline optimism index ended December at 104.4, a smaller drop than anticipated but still the fourth monthly decline in a row and the lowest reading since October 2017. Under the hood, six of the ten main components that make up the sentiment gauge deteriorated in December, with notable weakness seen in owners’ outlooks for the overall economy and plans to expand operations. Despite the broad declines, most metrics remain at historically strong levels that suggest business activity should continue to grow in the year ahead.
Moreover, a net 23 percent of owners said that they plan to create new jobs during the next three months, matching the best reading in decades, and a record 39 percent of owners reported having job openings they could not fill. A net 35 percent of respondents also said that they raised worker compensation in December, and around one in four cited plans to do the same during the next few months. That is not too surprising because 90 percent of the owners trying to add staff recently complained about there being “few or no” qualified applicants for the positions they were trying to fill. A near-record 23 percent of respondents also cited “quality of labor” as the top problem facing their business at the moment. The report’s authors added that “2018 was a banner year for small businesses in terms of job creation and compensation increases and as we begin the new year, small businesses are continuing their focus on attracting and retaining qualified employees for their businesses. Finding qualified workers is their top problem going into 2019, exceeding taxes and regulations.”
Sources: Econoday, NFIB
Post author: Charles Couch