Small business optimism index soars to record height

Juanita Duggan

Juanita Duggan

William Dunkelberg

William Dunkelberg

A monthly measure of optimism among small business owners has soared to record heights on more upbeat plans for everything from hiring to expansions to inventories.

The National Federation of Independent Business reported its Small Business Optimism Index rose nine-tenths of a point in August to 108.8. That’s the highest reading in the 45-year history of the index, topping the previous record of 108 posted in July 1983.

“Today’s groundbreaking numbers are demonstrative of what I’m hearing every day from small business owners — that business is booming,” said Juanita Duggan, president and chief executive officer of the NFIB.

Bill Dunkelberg, chief economist of the NFIB, said the index reflects conditions driving economic growth. “The index is dominated by real business activity that makes GDP grow: job creation plans, job openings, strong capital spending plans, record inventory investment plans and earnings.”

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 August, six of 10 components of the index advanced, while three retreated and one remained unchanged.

The proportion of those who responded to the survey upon which the August index was based who plan to increase staffing rose three points to a net 26 percent. A net 38 percent of reported unfilled job openings, and 25 percent cited the difficulty of finding qualified workers as their single most important business problem. All three proportions were records.

The share of those who expect the economy to improve slipped a point to a net 34 percent. But the proportion of those who said they consider now a good time to expand rose two points to a record 34 percent. A net 33 percent reported plans to increase capital outlays in coming months, up three points from July and the highest level since 2007.

The share of those who plan to increase inventories jumped six points to a net 10 percent, the highest reading since 2005. But at a negative 3 percent, more owners indicated existing inventories were too high rather than too low.

A net 26 percent said they expect sales to increase, down three points. A net 1 percent reported higher earnings, up two points.

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