The National Federation of Independent Business (NFIB) Tuesday morning reported that its small business optimism index for August slipped 0.2 points from 94.6 in July to come in at 94.4. The August reading remains well below the index’s 42-year average of 98.
The four “hard” measures of the index posted mixed results last month. The job creation component fell three percentage points in August to 9%, the job openings component rose four points to 30%, capital spending plans rose three points to 28% and inventory investment plans rose one point to 1%.
Some 24% of small business owners reported raising employees’ pay in the past three months. That’s unchanged on a seasonally adjusted basis from the July total. Just 14% are planning to raise wages in the next three months, down a point month over month.
In its commentary on the report, the NFIB noted:
After nine months of 1 percent GDP growth, the economy is set to turn in a better performance. This will result because the denominator in the change calculation is low, and because the huge inventory reduction that knocked a point off the GDP growth rate appears to be over, with an ever so modest increase in plans to build inventory. Consumer spending looks like it will maintain some strength, including car sales, although there are mixed signals on consumer sentiment. It doesn’t appear that capital spending is ready to pick up, but housing will continue to add to growth, even though it is supply constrained, due to a shortage of skilled labor and permitted land.
The NFIB reports that 30% of business owners currently have positions open that they are unable to fill (up four percentage points from July) and that 48% said there were few or no qualified applicants for the open positions, up two points from the prior month’s total.
Business owners said their single most important problem is taxes (21%), government regulations and red tape (20%) or quality of labor (15%). The least important problems are financing and interest rates and inflation (2%).