There were two important reports on the U.S. economy released this morning. First, the National Federation of Independent Business’s (NFIB’s) small business optimism index fell to 104.7 in March, the second month-over-month decline in a row. Despite the recent weakness, the headline sentiment gauge has still been able to hold on to most of its post-election gains and remains just shy of the cycle high. Under the hood, six of the ten main components that make up the optimism index deteriorated in March, with the largest decline seen in surveyed owners’ expectations for sales growth. A measure of capital expenditure plans (business investment) continued to improve last month, which bodes well for U.S. gross domestic product (GDP) growth down the road. As for small business labor conditions in March, job creation continued at a slower overall pace but hiring plans increased and total job openings remained elevated. Measures of wage growth firmed last month and reported plans to boost worker compensation over the next three months rose, not surprising since nearly half (45 percent) of surveyed owners complained that there are few or no qualified applicants for the positions they were trying to fill. The top two reported problems facing surveyed small business owners were once again taxes and government regulation, although such worries have lessened since the election. Bill Dunkelberg, NFIB’s chief economist, added that “Actual spending won’t show up until 2018, if all goes well. Retroactive tax rate changes might help later this year. In the meantime, the only engine for growth is going to be the private sector and its confidence in Washington, D.C.’s new management team. Hopefully, it won’t be shaken too badly by political antics.”
Elsewhere, the latest job openings and labor turnover survey (JOLTS) from the Bureau of Labor Statistics, one of Federal Reserve Chair Janet Yellen’s favorite economic indicators, showed that there were 5.743 million job openings in America in February (lagged release). That was an increase from January’s downward-revised 5.625 million print and the best headline reading since July. Total hires, though, pulled back in February to 5.314 million, the first monthly decline since September. Elsewhere in the report, the number of unemployed Americans per job opening improved in February, and the ratio of quits to layoffs and discharges rose to 1.95, the second-best reading since the turn of the century. The latter highlights U.S. workers’ increased willingness to give up their current job security for better employment opportunities.
Sources: Econoday, NFIB, U.S. DoL, FRBSLPost author: Charles Couch