August Small Business Optimism Steady, Job Openings Slip

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The National Federation of Independent Business (NFIB) Tuesday morning reported that its small business optimism index for August rose 0.1 percentage points from 105.2 in July to come in at 105.3, matching the year-to-date high posted in January. The consensus estimate from economists called for the index to decline by 0.7 percentage points to 104.5.

The four “hard” measures of the index posted mixed results last month. The job creation component fell by a point month over month in August to 18%, the job openings component fell four points to 31%, capital spending plans rose four points to 32% and inventory investment plans fell three points to 2%.

Some 28% of small business owners reported raising employees’ pay in the past three months. That’s up a point on a seasonally adjusted basis from the July total. Since January, net compensation changes have dropped two percentage points. Only 15% of small business owners are planning to raise wages in the next three months, down one point month over month and three points less compared to January.

In its comments on the report, NFIB noted:

With little good news from Washington D.C., it appears that owner optimism is holding at record levels because of private sector activity on Main Street, a reason to hire and build inventories and make capital purchases. Eventually, something will happen to taxes and health care, presumably improving on the current situation, so at least the outcome will not be a negative for owners.

The NFIB reports that 31% of business owners currently have positions open that they are unable to fill (down four percentage points from July and equal to January) and that 52% said there were few or no qualified applicants for the open positions, unchanged from the prior month’s total.

Business owners said their single most important problem is taxes (20%), followed by quality of labor (19%). Government regulations and red tape (16%) and cost/availability of insurance (11%) were the third and fourth most-cited problems. The least important problems are inflation (1%) and financing/interest rates (2%).