NFIB index: Small business owners more optimistic

William Dunkelberg

A monthly measure of optimism among small business owners has increased on more upbeat expectations for capital outlays, inventories and sales.

The National Federation of Independent Business reported its Small Business Optimism Index rose six-tenths of a point to 102.4 in October.

A lack of labor remains a problem, however, said William Dunkelberg, chief economist of the NFIB. “Labor shortages are impacting investment adversely. A new truck or tractor or crane is of no value if operators cannot be hired to operate them.”

The United States economy likely will remain steady for the next year, Dunkelberg said. “Any significant change in trade issues will impact financial markets more than the real economy during this period. Adjustments to a new set of ‘prices,’ such as tariffs, will take time.”

The NFIB bases its Small Business Optimism Index on the results of monthly surveys of the small business advocacy group, most of them business owners. For October, eight of 10 components of the index advanced.

A net 10 percent of small business owners responding to the survey upon which the October index was based expect the economy to improve, up a point from September.

A net 29 percent of owners reported plans for capital outlays, up two points. A net 23 percent of owners said they consider now a good time to expand, up a point.

A net 5 percent of owners reported plans to increase inventories, up three points. At a negative 4 percent, more owners still consider current inventories too high rather than too low.

A net 17 percent of owners said they expect sales to increase, up a point. But the share of owners who reported higher earnings fell five points. At a net negative 8 percent, more owners reporter lower earnings than higher earnings.

A net 18 percent of owners said they anticipate increased staffing, up a point. A net 34 percent of owners reported hard-to-fill job openings. And 25 percent of owners cited finding qualified labor as their single most important business problem.

“The economy is doing well given the labor constraints it faces,” Dunkelberg said. “Unemployment is very low, incomes are rising and inflation is low. That’s a good economy.”