The National Federation of Independent Business (NFIB) Tuesday morning reported that its small business optimism index rose from 103.3 in June to 104.7 in July. Last August’s index reading of 108.8 was the highest in the 45-year history of the index. The consensus estimate from economists had called for the July index to slip slightly to 103.0.
The percentage of business owners who now expect the economy to improve in the next few months rose four percentage points to 20% in July. The percentage who expect sales to rise over the same period rose five points to come in at 22%.
Some 32% of small business owners reported raising employees’ pay in the past three months. That’s up four points on a seasonally adjusted basis compared with June. Since December, net compensation projections are down seven points to 17% and down four points month over month.
The four “hard” measures of the index posted mixed results last month. The month-over-month job creation component rose by three points to 21%, the job openings component also increased by three points to 39%, capital spending plans increased by a point to 27% and plans to increase inventory investment remained unchanged at 3%.
NFIB chief economist William Dunkelberg commented: “Contrary to the narrative about impending economic doom, the small business sector remains exceptional. This month’s index is a confirmation that small business owners remain very optimistic about the economy but are being hamstrung by not finding the workers they need.”
Some 39% of business owners reported job openings they couldn’t fill, up by a point month over month. More than half (56%) reported few or no qualified applicants for available jobs, six points more compared to June’s report. More than a quarter (26%) of business owners said finding qualified workers remains their single most important business problem, followed by taxes (15%) and government regulations (13%).
There are ways, of course, to attract qualified workers: paying them more and offering more benefits leap to mind. The U.S. job market still had 7.35 million job openings in June, according to the latest Census Bureau report. The workers are out there, but apparently, they’re willing to wait for the right opportunity.