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The National Federation of Independent Business (NFIB) Tuesday morning reported that its small business optimism index for November jumped by 3.7 percentage points from 103.8 in October to come in at 107.5. The consensus estimate from economists called for the index to increase by 0.4 percentage points to 104.2.

The November reading is the second-highest in the 44-year history of the index, largely due to the still-new Trump administration and the proposed Republican tax bill.

The four “hard” measures of the index posted mixed results last month. The job creation component rose by six points month over month in November to 24%, the job openings component fell five points to 30%, capital spending plans fell one point to 26% and inventory investment plans rose three points to 7%.

Some 27% of small business owners reported raising employees’ pay in the past three months. That’s unchanged on a seasonally adjusted basis from the October total. Since January, net compensation changes have dropped by three percentage points. Some 17% of small business owners are planning to raise wages in the next three months, down four points month over month and down a point compared to January.

In its comments on the report, NFIB noted:

The NFIB indicators clearly anticipate further upticks in economic growth, perhaps pushing up toward four percent GDP growth for the fourth quarter. This is a dramatically different picture than owners presented during the weak 2009-16 recovery. The change in the management team in Washington has dramatically improved expectations. Job creation faded, but hiring plans soared, primarily in construction, manufacturing, and professional services. … As long as Congress and the President follow through on tax reform, 2018 is shaping up to be a great year for small business, workers, and the economy.

The NFIB reports that 30% of business owners currently have positions open that they are unable to fill (down five percentage points from October and down one point compared to January) and that 44% said there were few or no qualified applicants for the open positions, down eight points from the prior month’s total.

Business owners said their single most important problem is taxes (22%), followed by quality of labor (18%). Government regulations and red tape (16%) and poor sales (11%) were the third and fourth most-cited problems. The least important problems are financing/interest rates (2%) and inflation (3%).

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