May 2018 Small Business Optimism
Submitted by Atlas Indicators Investment Advisors on June 18th, 2018
Small business optimism is at generational highs according to the National Federation of Independent Business (NFIB). Their May 2018 survey reached the highest level in nearly 35 years! Its current reading of 107.8 (rising three points in the period) is bested only by the July 1983 reading. Small businesses optimism surged 18 months ago and is not showing signs of waning.
A few records were made within the report as well as a category reaching levels not seen in decades. Compensation increases rose to an all-time high as firms are competing for capable workers. The number of companies experiencing positive earnings trends also reached the highest level ever. Plans for expansion are the strongest in the survey’s history. Additionally, positive sales trends are the highest since 1995.
Along with compensation rising, another category could be foreshadowing faster inflation growth on the horizon. A net 19 percent of small business owners are planning to hike prices, the highest level since 2008. Firms are typically reluctant to raise prices unless they believe consumers are willing to pay more, so this could be a good sign for the health of the economy as long as it does not evolve into an accelerating upward spiral.
Finding qualified employees continues to be an issue for companies. Twenty-nine percent of proprietors have openings for skilled workers. This is the third highest reading since 2000 and demonstrates the need for more training throughout the economy.
May provided an enthusiastic release for this indicator. Small business owners believe in the current strength of the economy. They are encouraged by the tax and regulatory environment according to the NFIB. America’s output has been in an expansion for nearly nine years, and this indicator suggests no end in sight for the prosperous portion of the business cycle.
