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 October at 107.4, the second decline in a row but still one of the highest readings in the 45-year history of this survey. Under the hood, five of the ten main components that make up the sentiment gauge deteriorated in October, and one improved. The biggest decrease was seen in the percentage of owner respondents who said that they believe “now is a good time to expand their business.” Most of this was likely due to the uncertainty surrounding the midterm elections, and from a historical perspective the expansion outlook index still ended last month at a relatively strong level.
With respect to small business employment conditions, job creation remained healthy in October but there are signs that the pace of growth has slowed compared to earlier this year. At the same time, the number of vacancies continues to climb, suggesting that any weakness in job gains likely has more to do with a lack of available talent than a reduction in hiring plans. Moreover, 88 percent of small businesses trying to add payrolls in October complained about there being “few or no” qualified applicants, and “quality of labor” was once again owners’ top-cited problem. Such survey responses provide evidence of a tight labor market, which helps explain why more than a third (34 percent) of owners said that they had raised worker compensation during the past three months. The report’s authors added that “Small businesses have not experienced this level of labor market related challenges since the late 1990s when Y2K produced a surge in demand for computer and programming specialists. Current labor shortages though are more broadly distributed across industries.”
Post author: Charles Couch