Small Business Optimism Hot Streak Reaches Two-Year Mark
It’s been a little while since we last checked in on the National Federation of Independent Business’s small business optimism index but things seem to still be going strong. In fact the NFIB notes that this month marks two straight years where small business optimism has remained at historically high levels. Furthermore, coming at 107.4, October’s figure is only 1.4 points off of the all-time record 108.8 set in August of this year.
In a statement regarding the 24-month hot streak, NFIB President and CEO Juanita D. Duggan said, “For two years, small business owners have expressed record levels of optimism and are proving to be a driving force in this rapidly growing economy.” She went on to discuss this past month’s results, stating, “The October optimism index further validates that when small businesses get tax relief and are freed from regulatory shackles, they thrive and the whole economy prospers.” Meanwhile NFIB Chief Economist Bill Dunkelberg offered similar sentiments, saying, “Thanks to a number of factors, including the federal government’s loosening grip on the private sector, the U.S. regained the top spot in the World Economic Forum’s ranking as the most competitive country during the month of October. An unburdened small business sector is truly great for employment and the general economy.” He concluded, “October’s report sets the stage for solid economic and employment growth in the fourth quarter, while inflation and interest rates remain historically tame. Small businesses are moving the economy forward.”
Despite the continued rosy outlook, it seems that the hiring woes small business owners have been facing aren’t going away. With the national unemployment rate a 49-year low of 3.7%, many entrepreneurs say they’re having trouble filling open positions. According to the NFIB survey, 60% of small business owners report trying to hire but 53% of those surveyed note they’ve had few or no qualified applicants for the positions. Among those actively looking to hire, that figure climbs to 88%. As a result, 38% of respondents say they have open positions they cannot fill — tying last months record high. In a bid to attract (or retain) talent and fill open positions, 23% of employers say they plan to increase compensation while 34% say they have raised wages. These figures seem to line up with the government’s recent jobs report that shows a 3.1% year over year gain in wages as well as a 5¢ increase for October, bringing the average hourly wage to $27.30.
While October’s NFIB small business optimism index was largely more of the same, that’s also what makes it notable. Of course one would be remiss not to point out the two year anniversary of this record optimism takes us back to November 2016 — the month in which President Donald J. Trump was elected. Through some of the turmoil that’s come in the past two years, which may have played a role in Democrats retaking the House of Representatives during this month’s midterm elections, it seems that small business owners are still backing the administration’s economic policies. With a split Congress taking office in January, it will be interesting to see if the change impacts any of those policies and whether optimism will begin to slip as a result. Stay tuned.