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 104.5 in April, the third 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, three of the ten main components that make up the optimism index deteriorated in April, with the largest decline seen in surveyed owners’ expectations for economic growth in America. Five of the ten main components improved last, included solid gains in owners’ outlooks for sales growth and business investment. As for small business labor conditions in April, total employment rose and the number of job openings jumped to a record high. Forty-eight percent of surveyed small business owners last month complained that there are few or no qualified applicants for the positions they are trying to fill. That is the highest reading since November and not too surprising since overall worker compensation declined in April and projected wage growth was unchanged. Elsewhere in the report, 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 “Small business owners have held on to their optimism, and have reported improvements in activities that signal more growth in the real economy, even if modest. If Congress does not disappoint, small firms are ready to bet on a more optimistic future by investing in their businesses and hiring more workers.”
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 March (lagged release). That was an increase from February’s downward-revised 5.682 million print and the best headline reading since July. Total hires also rose in March but again the prior month’s figure was revised lower. On a year-over-year basis, growth in both job openings and total hires dipped into negative territory in March for the first time since February 2010, although this could simply be a side effect of the economy nearing full-employment. Elsewhere in the report, the number of unemployed Americans per job opening improved in March, and the ratio of quits to layoffs and discharges rose to 1.93, 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