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Economy in Brief

U.S. Small Business Optimism Increases
by Tom Moeller  November 14, 2017

The National Federation of Independent Business reported that its Small Business Optimism Index rose to 103.8 during October following a September decline to 103.0. The figure remained below its January high of 105.9, but increased 19.4% y/y.

An stronger 23% of firms felt that now was a good time to expand the business. That follows, however, a sharp September drop. Twenty-one percent of firms expected higher real sales, up sharply from September and up from just one percent twelve months earlier. A slightly higher 32% expected the economy to improve, still well below last year's high.

Deteriorating to 18% was the percentage of firms expecting to increase employment, though that remained up sharply y/y. A higher 52% of firms found few or no qualified applicants for job openings, up from 48% twelve months earlier.

A slightly higher eight percent of firms raised average selling prices and a strengthened 22% planned to do so. An improved 27% of firms raised worker compensation and a sharply higher 21% planned to do so, the most since December 2015 and up from the 12% low in February of 2016.

A stable 21% of firms indicated that taxes were the single most important problem. A sharply higher 20% felt challenged by the quality of labor, equaling the most since 2000. A greatly lowered 14% reported that government requirements were the largest single problem. A higher 11% of firms reported insurance cost & availability as the largest hurdle, but a lessened ten percent of firms indicated that poor sales were the largest single problem. A sharply lower seven percent reported competition from large businesses as the largest problem. A low six percent felt that cost of labor was the largest single problem. Inflation was reported as the largest problem by a steady two percent of respondents.

Roughly 24 million small businesses exist in the U.S. and they create 80% of all new jobs. The typical NFIB member employs 10 people and reports gross sales of about $500,000 a year. The NFIB figures can be found in Haver's SURVEYS database.

National Federation of Independent Business (SA, Net % of Firms) Oct Sep Aug Oct'16 2016 2015 2014
Small Business Optimism Index (1986=100) 103.8 103.0 105.3 94.9 95.3 96.1 95.6
Firms Expecting Economy To Improve 32 31 37 -7 -5 -5 -5
Firms Expecting Higher Real Sales 21 15 27 1 5 8 11
Firms Reporting Now is a Good Time To Expand the Business 23 17 27 9 10 12 10
Firms Planning to Increase Employment 18 19 18 10 11 12 10
Firms With Few or No Qualified Applicants For Job Openings (%) 52 49 52 48 46 46 43
Firms Reporting That Credit Was Harder To Get 4 6 3 4 5 4 6
Firms Raising Average Selling Prices 8 6 9 2 0 2 8
Firms Raising Worker Compensation 27 25 28 25 24 23 21
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