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Economy in Brief

U.S. Small Business Optimism Strengthens in September
by Tom Moeller  October 13, 2020

• NFIB Small Business Optimism Index increases sharply.

• Strengthen occurs across the board, including hiring and pricing.

The National Federation of Independent Business (NFIB) Small Business Optimism Index increased to 104.0 in September after rising to 100.2 in August. It was the highest level since February.

Plans to increase employment occurred amongst a net 23% of respondents, the most in almost two years and up from April's low of one percent. An increased 50% of respondents found few or no qualified candidates to fill job openings in September, the most since February and up from a low of 37% in May. A higher net 32% of respondents felt that the economy would improve, but that remained down from 39% in June. An increased net 13% planned to expand the business, a figure stable for two months. A strengthened net eight percent of firms expected higher real sales, but that remained down from 16% twelve months earlier.

Credit was harder to get by a still low two percent of respondents, down from April's high of four percent.

Pricing power improved greatly. A greatly increased net 13% of firms raised prices, the strongest reading since January and up from 18% who lowered prices in April. A net higher 17% were planning to raise prices in September, the most since February. An increased net 23% of firms raised worker compensation while a higher 16% planned to do so over the next three months.

The most important issues for small businesses were the quality of labor (21%), taxes (16%) and poor sales (12%). The cost of labor troubled a steady nine percent of respondents, increased from six percent in May.

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) Sep Aug Jul  Sep'19 2019 2018 2017
Small Business Optimism Index (1986=100) 104.0 100.2 98.8 101.8 103.0 106.7 104.9
Firms Expecting Economy to Improve 32 24 25 9 13 32 39
Firms Expecting Higher Real Sales 8 3 5 16 18 26 23
Firms Reporting Now Is a Good Time to Expand the Business 13 12 11 22 25 30 23
Firms Planning to Increase Employment 23 21 18 17 19 21 18
Firms With Few or No Qualified Applicants for Job Openings (%) 50 46 44 50 52 51 49
Firms Reporting that Credit Was Harder to Get 2 1 2 4 4 4 4
Firms Raising Average Selling Prices 13 1 -2 8 13 15 7
Firms Raising Worker Compensation 23 18 15 29 31 33 27
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