Small Business Owners Report Job Creation, Expansion Plans

Small business optimism continued its two-year streak of record highs according to the National Federation of Independent Business’s (NFIB) October Small Busi- ness Optimism Index. Overall, small businesses continue to support the 3%-plus growth of the economy and add significant numbers of new workers to the employment pool. Owners believe the current period is a good time to expand substantially, are planning to invest in more inven- tory, and are reporting high sales figures.

“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 NFIB president and CEO Juanita D. Duggan. “The October optimism index further validates that when small busi- nesses get tax relief, and are freed from regulatory shackles, they thrive and the whole economy prospers.”

Seasonally adjusted, 30% of owners think the cur- rent period is a good time to expand substantially, citing the economy (72%) and strong sales (14%). Nine percent of those who believe it is a good time to expand cited the political climate, with 17% who believe it is a bad time to expand blaming politics. Although politics matter, the index indicates that economic factors, good or bad, are the main drivers of expansion decisions.

The net percent of owners planning to invest in more inventory rose two points to a net 5%, the 21st posi- tive month since January 2017. This is due to the owners viewing current stocks as too low falling to a net negative 2%, historically a tight condition. A net 8% of all owners, seasonally adjusted, reported higher nominal sales in the past three months, unchanged from September.

“Thanks to a number of factors, including the federal government’s loosening grip on the private sector, the U.S. regained the top spot in the World Economic Forum’s ranking as the most competitive country during the month of October,” said NFIB chief economist Bill Dunkelberg. “An unburdened small business sector is truly great for employment and the general economy. 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.”

NFIB reports that job creation remained solid in October for small businesses at a net addition of 0.15 workers per firm. However, 38% of all owners reported job openings they could not fill in the current period, equaling September’s record high. Sixty percent of owners reported hiring or trying to hire, with 88% reporting few or no qualified applicants for the positions they were trying to fill. Thirty-four percent reported raising overall compensa- tion in hopes of hiring and retaining needed employees, only three points off September’s record high.

NFIB’s CEO, Duggan, commenting on the 2018 mid-term elections, said, “The 115th Congress achieved substantial progress for small businesses by removing bur- densome regulations and making small business tax relief a reality. The next Congress must continue this progress, including protecting the tax cuts that have made a signifi- cant difference for millions of small businesses across the country. We look forward to welcoming the 116th Con- gress and continuing to work together to advance policies that allow our nation’s small businesses to remain strong.”

(SOURCE: The Weekly Propane Newsletter, December 10, 2018)