Small business owner confidence remained elevated last month, according to a new report from the National Federation of Independent Business (NFIB). Specifically, the headline optimism index ended September at 107.9, the first decline since June but not too surprising following the 45-year high hit in the previous month. Under the hood, six of the main components that make up the sentiment gauge deteriorated in September, and three improved. Most of the weakness was concentrated in surveyed owners’ reported plans to boost inventories and make capital outlays, although this was partially offset by brighter outlooks for sales growth.
With respect to small business employment conditions, hiring rebounded in September, but unfilled vacancies remained high, particularly in the construction, manufacturing, transportation, wholesale trade, and retail sectors. Further, gauges of job creation plans and complaints about a lack of skilled applicants held near record levels in September, and “quality of labor” was once again owners’ top-cited problem. Such statistics provide more evidence of a tight labor market, which helps explain why 37 percent of owners reported raising worker compensation during the past three months, an all-time high. The report’s authors added that the labor shortage hurts small businesses’ “ability to grow and produce more stuff,” but stressed that some of these problems can be addressed by “higher labor force participation induced by higher compensation, labor saving technology, and new scientific breakthroughs.”
Post author: Charles Couch