Small business owner optimism cooled last month, according to new data from the National Federation of Independent Business (NFIB). Specifically, the headline sentiment index fell to 104.9 in December, the largest month-over-month drop since June 2015 but not too surprising following November’s spike to the 2nd-highest reading on record. Under the hood, five of the ten main components that make up the confidence gauge deteriorated last month, with much of the weakness concentrated in surveyed owners’ expectations for the overall economy and reported plans to build inventories.
On the bright side, small business labor conditions generally strengthened in December, as measures of total employment and job openings rose, along with a jump in reported plans to boost worker compensation. The latter is to be expected with 54 percent of surveyed owners complaining about there being few or no qualified applicants for job vacancies, an all-time high. Moreover, quality of labor remained one of the most important problems cited by small business owners in the December survey, surpassed only by taxes. NFIB chief economist William C. Dunkelberg added that “The NFIB indicators clearly anticipate further upticks in economic growth, perhaps pushing up toward 4 percent for the fourth quarter of 2017.”
Sources: NFIBPost author: Charles Couch