Small Business Optimism Remained Historically High in August

The NFIB Small Business Optimism Index ticked upwards to 105.3, its highest reading since February. August’s index was 0.1 point above July’s 105.2 reading. Four of the ten index components rose, while five declined. Twenty-seven percent of business owners surveyed said the next three months was a good time to expand, the highest reading in over twelve years.

Reported job creation slipped 1 point, as 59% of businesses reported hiring or trying to hire. However, 52% reported few or no qualified applicants for the positions they were trying to fill. Nineteen percent of employers surveyed cited the difficulty of finding qualified workers as their top business problem. A seasonally adjusted net 18% of owners plan to create new jobs, down one point from the previous month but historically strong.

Seasonally adjusted, the net percent of owners expecting better business conditions was unchanged at 37%. The percent of owners reporting higher sales in the past three months compared to the prior three months was a net 3%, a 3-point improvement from July’s reading. Seasonally adjusted, the net percent of owners expecting higher real sales volumes grew five points to 27% of owners. Capital spending grew 3 points as 60% of owners reported capital outlays. The percent of owners planning capital outlays in the next 3 to 6 months increased four points to 32%, the strongest reading since 2006.

Credit conditions remained historically low, as 3% of owners reported that all their borrowing needs were not met, unchanged from July. Only 2% of business owners surveyed reported that financing was their top business problem, compared to 20% citing taxes.

Read the NFIB report.

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About Stephen Newton

Stephen Newton is an economic research associate at ABA.