Small-business owners expect higher sales and anticipate that now is a good time to expand, according to October’s Index of Small Business Optimism from the National Federation of Independent Business (NFIB). Four of the index’s components rose while five declined slightly, and one remained unchanged. The categories of expansion and sales expectations each climbed six points; the job openings category rose by five points. Overall, the index rose to 103.8 in October, up from 103 in the previous month.
“Owners became much more positive about the economic environment last month, which suggests a longer-run view,” said NFIB Chief Economist Bill Dunkelberg. “In the nearer term, they are more optimistic about real sales growth and improved business conditions through the end of the year.”
The labor market remains tight for small-business owners, which has been a trend the past year. Among owners, 59% reported that they tried to hire in October; 88% of them reported finding no or few candidates who were qualified. Construction firms are still trying to meet demand due to the recent hurricanes, with the result that hiring activity was particularly strong in Florida and Georgia.
Just 2% of small-business owners said that financing was their top business problem. Four percent reported that all of their borrowing needs were not met, a historical low. Twenty-nine percent said that their credit needs were met, a decrease of four points, and 53% said they were not interested in a loan, an increase of two points.
“Consumer sentiment surged based on optimism about jobs and incomes, an encouraging development as consumers account for 70 percent of GDP,” Dunkelberg said. “We expect a pickup in auto spending as people in Texas and Florida continue to replace cars that were damaged in hurricanes. We expect the same increase in home improvement spending, partly because of the hurricanes, but also because of the skyrocketing price of homes.”
– Adam Fusco, associate editor