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Economy in Brief
U.S. Durable Goods Orders' December Gain Disappoints
Manufacturers' orders for durable goods increased 0.2% during December (1.4% y/y)...
U.S. Mortgage Applications Tumble
The MBA Mortgage Loan Applications Index fell 4.1% w/w (+39.7% y/y) in the weekend January 22...
German Consumer Confidence in February Is Projected Much Lower
The forward-looking GfK consumer confidence/climate gauge for February has stumbled for the fourth month in a row...
U.S. Consumer Confidence Recovers During January
The Conference Board Consumer Confidence Index increased 2.5% (-31.5% y/y) to 89.3 during January...
U.S. FHFA House Price Index Rose Further in November
The FHFA House Price Index increased 1.0% m/m in November...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Tom Moeller October 9, 2018
The National Federation of Independent Business (NFIB) reported that its Small Business Optimism Index fell to 107.9 during September after reaching a record high of 108.8 in August. The index level remained 4.8% higher than it was one year ago.
A diminished 33% of respondents expected the economy to improve, which was down from last year's 48% monthly high. A still firm 33% thought that now was a good time to expand the business. The 30% of respondents who planned to make capital outlays was down m/m and reversed the prior month's gain. Offsetting these weakened readings was a rise to 29% of respondents expecting higher real sales, matching the highest figure since May.
Labor market readings eased. Twenty-three percent of respondents planned to increase employment versus 26% in August. Also, a lessened 53% indicated that there were few or no qualified candidates for job openings, down from the record 55% in August.
Workers earned, however, a higher level of compensation. A record 37% of firms increased labor compensation last month, up from 27% percent during all of last year. Also, a near-record 24% of businesses were planning to raise compensation, up from 18% last September.
Pricing pressure eased. A net 15% of firms were raising average selling prices, a figure that was below the 19% May high. Twenty-four percent firms were planning to raise prices and has been fairly stable since February.
Credit remained readily available. A lessened three percent of businesses reported difficulties in obtaining credit. That remained near the lowest level of the economic expansion.
This survey inquires about problems facing small business. The most pressing problem in September was the quality of labor, reported by 22% of firms. Seventeen percent indicated that taxes were the largest problem, down from a December 2014 high of 27%. Government requirements were worrisome to 14% of respondents, below the 22% in 2015. Competition from large businesses jumped to ten percent as the biggest problem, the highest figure since May. A stable eight percent of firms reported the cost of labor as the most significant problem. Insurance costs/availability worried a slightly higher 10%. Poor sales fell to a near-record low of 5%, but financial & interest rate problems worried an increased three percent of respondents. A slightly higher three percent reported inflation as the biggest problem.
Roughly 24 million small businesses exist in the U.S. and they create 80% of all new jobs. The index is based 1986=100. 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) | Sep | Aug | Jul | Sep'17 | 2017 | 2016 | 2015 |
---|---|---|---|---|---|---|---|
Small Business Optimism Index (1986=100) | 107.9 | 108.8 | 107.9 | 103.0 | 104.9 | 95.3 | 96.1 |
Firms Expecting Economy to Improve | 33 | 34 | 35 | 31 | 39 | -5 | -5 |
Firms Expecting Higher Real Sales | 29 | 26 | 29 | 15 | 23 | 5 | 8 |
Firms Reporting Now Is a Good Time to Expand the Business | 33 | 34 | 32 | 17 | 23 | 10 | 12 |
Firms Planning to Increase Employment | 23 | 26 | 23 | 19 | 18 | 11 | 12 |
Firms With Few or No Qualified Applicants for Job Openings (%) | 53 | 55 | 52 | 49 | 49 | 46 | 46 |
Firms Reporting That Credit Was Harder to Get | 3 | 5 | 4 | 6 | 4 | 5 | 4 |
Firms Raising Average Selling Prices | 15 | 17 | 16 | 6 | 7 | 0 | 2 |
Firms Raising Worker Compensation | 37 | 32 | 32 | 25 | 27 | 24 | 23 |