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 August at 105.3, a fractional increase from July but still the highest headline reading since February and better than economist had expected. Under the hood, four of the ten main components that make up the sentiment gauge improved last month, including large gains in surveyed owners’ expectations for sales growth and capital expenditures. As for small business labor conditions, job creation was little changed in August but reported plans to raise worker compensation increased. The latter is not too surprising since 52 percent of owner respondents last month complained that there were few or no qualified applicants for open positions, matching the all-time high. Moreover, quality of labor in August remained the 2nd-most important problem facing surveyed small business owners, just below taxes and above government regulation and red tape. NFIB chief economist William C. Dunkelberg added that “Employee compensation can rise in real terms over time only if employees produce more stuff per hour e.g. productivity rises. This depends on both supply and demand factors. … Thus, the need for pro-growth policies which will help finance the capital investments needed to improve long-run productivity.”
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 6.17 million job openings in America in July (lagged release). That is a new all-time high and significantly better than economists had anticipated. The biggest gains in July were found in the services (+111,000), transportation, warehousing, and utilities (+70,000), and educational services (+26,000) categories. The number of unemployed Americans per job opening held near a record low in July and the ratio of quits to layoffs and discharges bounced slightly following the prior month’s sharp decline. Altogether these measures remain supportive of U.S. workers’ increased willingness to give up their current job security for better employment opportunities.
Sources: Econoday, Bloomberg, Twitter, ZH, NFIB, U.S. DoL, FRBSLPost author: Charles Couch