A monthly measure of optimism among small business owners has retreated, but remains near historically high levels.
The National Federation of Independent Business reported its Small Business Optimism Index declined a half point to 107.4 in October. The latest reading remains only 1.4 points below a record high 108.8 posted in August.
“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,” said Juanita Duggan, president and chief executive officer of the NFIB. “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.”
Bill Dunkelberg, chief economist of the NFIB, said the reading and other factors bode well for the near future. “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.”
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 October, five components of the index fell, one component rose and four remained unchanged.
The proportion of those who responded to the survey upon which the October index was based who expect the economy to improve held steady at a net 33 percent.
A net 30 percent of business owners reported plans to increase capital outlays in coming months, also unchanged. A net 30 percent of owners said they consider now a good time to expand, down three points.
A net 22 percent of owners reported plans to increase staffing, down a point. A net 38 percent of owners reported unfilled job openings, unchanged from a month ago, and 23 percent cited the difficulty of finding qualified worker as their single most pressing business problem. Meanwhile, 34 percent of owners reported raising compensation, down three points from a record high in September.
The share of business owners planning to increase inventories rose two points to a net 5 percent. At a net negative 2 percent, more owners indicated their existing inventories were too high rather than too low.
The proportion of those who said they expect sales to increase fell a point to a net 28 percent. At a net negative 3 percent, more owners reported lower earnings than higher earnings.