Small business confidence remains at high level

A monthly index tracking optimism among small business owners remains unchanged, but at an historically high level.

The National Federation of Independent Business reported its Index of Small Business Optimism held steady at 104.5 for May.

“The remarkable surge in optimism that began last year right after the election shows no signs of slowing down,” said Juanita Duggan, president and chief executive officer of the NFIB. “Small business owners are highly encouraged by the president’s regulatory reform agenda, and they remain optimistic there will be tax reform and health care reform. This is a policy driven phenomenon.”

Problems persist for small business owners, though, including the effects of a tightening labor market, said Bill Dunkelberg, chief economist for the NFIB. “It’s forcing small business owners to increase compensation, which we’re seeing in this data, to attract new workers and keep the ones they have. But it also means a lot of small business owners are short-handed.”

The NFIB bases the index on the results of monthly surveys of members of the small business advocacy group, most of them small business owners. For May, five of 10 components of the index advanced, four retreated and one remained unchanged.

A net 39 percent of small business owners responding to the survey upon which the May index was based said they expect the economy to improve, up a point.

A net 28 percent of owners reported plans to increase capital outlays over the next three months, up a point. A net 23 percent of owners said they consider now a good time to expand, down a point.

A net 18 percent of owners reported plans to increase hiring, up two points. A net 34 percent of owners reported hard-to-fill job openings, up a point.

A net 1 percent of owners reported plans to increase inventories, down two points. At a net negative 6 percent, more owners said current inventories were too high than too low.

A net 22 percent of owners said they expect higher sales, up two points. At net negative 10 percent, more owners reported lower earnings than higher earnings.