The National Federation of Independent Business (NFIB) Tuesday morning reported that its small business optimism index rose from 102.4 in October to 104.7 in November. This month’s index is the highest reading since May 2018. The consensus estimate from economists had called for the November index to increase to 102.9.

The percentage of business owners who now expect the economy to improve in the next few months rose by three percentage points to 13% in November following a one-point gain in October and a drop of three points in September. The earnings trend rose 10 points from a negative eight to a net 2% of business owners reporting quarter-over-quarter profits.

Some 30% of small business owners reported raising employees’ pay in the past three months. That’s flat on a seasonally adjusted basis compared with October. The percentage of firms planning to raise net compensation rose by four points to 26%.

In its small business jobs report published last week, the NFIB noted that the month-over-month job creation index increased by three points to 21% and the job openings score rose by four points to 38%.

NFIB CEO Juanita D. Duggan commented in the jobs report

Despite a tight labor market, small business owners are doing exactly what they said they would do thanks to tax relief. They’re creating new jobs and raising compensation at record levels. The only thing holding them back continues to be finding qualified workers, but in spite of that challenge the small business economy is roaring.

Some 38% of business owners reported job openings they couldn’t fill, up by four points month over month. A full 61% of business owners reported hiring or trying to hire workers last month, and 88% reported few or no qualified applicants for the available jobs.

The group’s chief economist, William Dunkelberg, commented:

Owners are aggressively moving forward with their business plans, proving that when they’re given relief from the government, they put their money where their mouth is, and they invest, hire, and increase wages. Owners are most closely focused on issues that directly impact their business, including the real, significant tax relief they were given two years ago, and they’re anxious to see that relief made permanent.

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