Last week we learned that small business owner confidence has improved recently, and this is supported by a new report out this week from the National Federation of Independent Business (NFIB). Specifically, the headline optimism index ended October at 102.4, a larger increase than expected and an overall historically strong reading consistent with continued economic growth in America. In fact, the report’s authors expect “the economy will be steady at its current level of activity for the next 12 months,” and believe “only a major unexpected disruptive event can dent the economy in the near-term.”
Eight of the ten main components that make up the confidence gauge firmed in October, including marked gains in surveyed owners’ reported plans to grow inventories and boost capital investment, both of which bode well for fourth quarter U.S. gross domestic product (GDP). As for employment conditions, small business job creation continued at a healthy pace last month, albeit weaker compared to the start of the year. Total job openings remained elevated, hiring plans increased, and reported intentions to boost worker compensation jumped to the highest reading since May. Continued improvements in wages and benefits would not be surprising since a near-record 53 percent of surveyed owners in October complained about there being “few or no” qualified job applicants for the vacancies they are trying to fill. Moreover, “quality of labor” was once again the top-cited problem facing small businesses, and the “cost of labor” appears to be a growing challenge as well.