New Record: Small Business Optimism Rises Once Again
A new survey finds that small business optimism has reached an all-time high, shattering a previous record set all the way back in 1983 during the Presidency of Ronald Regan. Released today, the latest National Federation of Independent Business (NFIB) Small Business Optimism Index surged from 107.9 in July to 108.8 in August. The index blew past the record of 108 in the process to mark a new high for the 45-year-old survey.
In a statement attached to the record-breaking survey, NFIB President and CEO Juanita D. Duggan once again emphasized the impacts of the tax bill that was passed last year along with other economic factors. Duggan said, “Today’s groundbreaking numbers are demonstrative of what I’m hearing every day from small business owners – that business is booming. As the tax and regulatory landscape changed, so did small business expectations and plans. We’re now seeing the tangible results of those plans as small businesses report historically high, some record breaking, levels of increased sales, investment, earnings, and hiring.” Meanwhile NFIB Chief Economist Bill Dunkelberg spoke to the some of the ways the index has evolved over the years, noting, “At the beginning of this historic run, Index gains were dominated by expectations: good time to expand, expected real sales, inventory satisfaction, expected credit conditions, and expected business conditions. Now the Index is dominated by real business activity that makes GDP grow: job creation plans, job openings, strong capital spending plans, record inventory investment plans, and earnings. Small business is clearly helping to drive that four percent growth in the domestic economy.”
Elsewhere in the report, there was some good news and bad news when it comes to hiring. For example, while 15% of those surveyed reported increasing employment by an average of 3.2 workers, that figure was down two percentage points from last month. Additionally the skilled worker shortage that respondents had mentioned in the past appears to be getting worse. In August 55% reported that there were no or very few qualified applicants for positions they were trying to fill. That figure rose to 89% among businesses that were actively hiring. As a result a record number of business owners (25%) ranked “finding qualified workers” as their top concern.
Make no mistake that the latest NFIB small business optimism index’s record score is a big deal. Although we’ve discussed recent installments of the survey at length along with similar studies, the fact that the index not only continues to rise but jumped so significantly in August is certainly something to take notice of. What’s odd is that the increase also comes as hiring qualified candidates continues to be a problem for the majority of businesses. Therefore expect some things to change in future reports — be it a dip in optimism or perhaps an increase in wages and compensation to attract workers. Either way, it sounds like a pretty good time to be a small business.