Small business confidence improved again last month, marking the third straight month of improvement after a large decline in June. According to the NFIB’s index, small business confidence improved from 95.9 up to 96.1, versus expectations for a decline to 95.5. Last month’s increase is also notable due to the fact that the index is back at its long-term average of 96.1 after three month’s below that level. Outside of the actual numbers in the reports, one notable aspect of this month’s report was the finding that 75% of small business owners are either ‘significantly’ (41%) or ‘somewhat’ (34%) distressed about indecisiveness at the FOMC.
As we do each month, we wanted to provide an update of what the biggest problems facing small business owners are. As has been the case for several years now, the one-two punch of Government Red Tape and Taxes are a big problem for small business owners, and both saw increases relative to their readings in August. Outside of those two problems, the only two other problems that rank in the double digits are Quality of Labor (16%) and Poor Sales (11%). In the case of the latter, this month’s decline of 3 percentage points helped to erase most of August’s four-point jump. In the case of Quality of Labor, this month’s increase was only two percentage points but is a continuation of a trend that has been in place for a year now. As shown in the lower chart, labor quality issues are becoming increasingly common in this economy. In fact, the seven-point increase that we saw over the last year is the largest y/y increase since at least 2007.