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 ended April at 93.6. This is a better rebound that economists had expected following the roughly 2-year low in owner confidence hit in March. Five of the ten main components that make up the sentiment index improved last month, with the biggest gains being found in earnings trends and current job openings. Moreover, measures of hiring plans and wage growth both increased in April, and more surveyed small business owners complained about their being “few or no” qualified applicants for open positions. The top two problems facing surveyed small business owners were once again taxes and government regulation but “quality of labor” continues to be a growing challenge. Owners were also worried about poor sales in April, which is worth monitoring going forward because such concerns often lead unemployment. Bill Dunkelberg, NFIB’s chief economist, added that “Measures of consumer optimism are also weak, offering no hope of significant gains in spending as the savings rate increases. There is no exuberance to be found, a flatness in optimism pervades the economy, consistent with the plodding growth characterizing this recovery.”
Elsewhere, the latest job openings and labor turnover survey (JOLTS) from the Bureau of Labor Statistics, one of Fed Chair Janet Yellen’s favorite labor market indicators, showed that the number of job openings in America continues to hover near record levels. Specifically, there were 5.757 million U.S. job openings in March (lagged), a significant increase from February’s upward-revised figure and just fractionally below the all-time high hit in July of last year. This surge in job openings is encouraging because it suggests that April’s downshift in payrolls growth was likely not the start of a new trend. Total hires slid to 5.292 million in March but the number of unemployed workers per job opening fell to 1.41, the best reading since October. The ratio of quits to layoffs and discharges rose to 1.78 in March, the 2nd-highest reading of the recovery and a sign of American workers’ increased willingness to give up their current job security for better employment opportunities. Moreover, the quits rate has historically been a leading indicator of wage inflation.
Sources: Econoday, Twitter, Bloomberg, NFIB, U.S. Department of Labor, FRBSLPost author: Charles Couch