Small biz buoyed by strong economic indicators

Written on Aug 17, 2017

The National Federation of Independent Business (NFIB) recently released its small business optimism index for July, which shows hiring and sales indicators have got small business owners thinking positively. The monthly index of small business optimism hit 105.2 for July, higher than the 103.6 level in June.

NIFB’s Small Business Economic Trends report for July 2017, which is based on a survey of 10,000 small business owners, shows owners are in high spirits thanks in part to gains in hiring activity. Over the past few months, small businesses have reported a solid average employment change of 0.21 workers per firm. NFIB says 13% (up 3 points) of small business owners reported increasing employment an average of 4.5 workers per firm.

Small business owners are also feeling optimistic about the economy because their customers are feeling optimistic about the economy. The U.S. economy (GDP) grew by about 2.6% in the second quarter of the year, a positive sign that Americans are opening up their wallets according to an NPR report. NFIB stresses this growth — and optimism — among small business owners is largely attributable to increased consumer spending.

“There’s nothing like more customers to make owners happy, and optimism held up as did important measures of spending and hiring plans,” wrote NFIB in a post on the company’s blog.

Main Street has also preserved the surge in optimism that started the day after the U.S. election thanks to stronger customer demand. In the past three months, more small business owners have reported higher nominal sales compared to the prior three months, representing a 4 point improvement over June.

Overall, NFIB’s data shows seven of the 10 Index components posted a gain, while two declined. One was unchanged.

Sixty percent of all small business owners reported hiring or trying to hire in July (up 6 points). However, a whopping 87% of those owners said they had a tough time finding qualified applicants for the positions they were trying to fill.

“The labor market is getting very tight, and the problem is most severe in the construction and manufacturing sectors,” said Bill Dunkelberg, NFIB Chief Economist.

Moreover, small business owners showed declined enthusiasm for laying out capital expenditure plans possibly because they are still waiting to see what business-friendly policies come out of Washington.

“Congress still holds the key to faster growth, so let’s hope they open the door,” added Dunkelberg.

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