U.S. Small Business Optimism Increases

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.