NFIB: Small Business Optimism Improved in October, Remaining Highly Elevated

The National Federation of Independent Business (NFIB) said that the Small Business Optimism Index bounced back from 103.0 in September, its lowest level since the election, to 103.8 in October. Overall, small business owners remain very upbeat in their outlook, with the headline index averaging 104.6 year-to-date.

In comparison, it was 94.9 one year ago. In this release, the percentage of respondents suggesting that the next three months would be a “good time to expand” rose from 17 percent to 23 percent, and the net percentage feeling that sales would be higher over the next three months increased from 15 percent to 21 percent. Each of these figures were close to the year-to-date averages, with both up significantly from the rates seen last year.

The labor market also remains strong. The percent with positions that they are unable to fill right now ticked up from 30 percent in September to 35 percent in October. That matched the job openings rate seen in July, which was the best reading since November 2011.

Meanwhile, the net percentage planning to add workers in the next three months edged down from 19 in September to 18 in October. The September pace matched the rate seen in July, which was the strongest reading since December 1999. As such, even with a slight easing in hiring expectations in this survey, hiring plans remain quite elevated. At the same time, capital expenditure plans were unchanged, with 27 percent of respondents planning to spend on capital in the next three to six months.

The top “single most important problem” was taxes (21 percent), highlighting the need for comprehensive business tax reform. The quality of labor (20 percent) and government regulations and red tape (14 percent) also topped the list.

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM) and the Director of the Center for Manufacturing Research for The Manufacturing Institute, where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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