Small business owner confidence continues to improve, according to a new report from the National Federation of Independent Business (NFIB). Specifically, the headline optimism index rose from 102.4 in October to 104.7 in November, the largest monthly increase in over a year and the highest headline reading since July. Seven of the ten main components that make up the sentiment gauge firmed in November, including big gains in current inventories and the number of surveyed owners who believe “now is a good time to expand” their business, both of which bode well for U.S. gross domestic product (GDP).
As for employment conditions, small business job creation jumped to an 8-month high in November, and gauges of job openings and hiring plans for the next three months rose as well. Reported intentions to boost worker compensation also surged to the best reading on record, clearly a response to the tight labor market as a majority of respondents continued to complain 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. Concerns about taxes and government regulation have eased dramatically in recent years, but this could change as we near the next election. The report’s authors added that “Two years ago, Congress and the President provided real, significant tax relief to small business owners. Now owners are anxious to have their tax cuts made permanent, so Congress needs to get back to work.”
Sources: Econoday, NFIB, FRBA