Small Business optimism in the US was weaker than expected in October (107.4 vs 108).  After hitting a record high two months ago, the headline index has now declined for two straight months.  We would note, however, that outside of 2018, there have only been four monthly prints going all the way back to 1975 where the headline index was higher.  According to NFIB, current levels continue to support economic growth in excess of 3%, which is great for businesses and consumers, but not the best news for stock market bulls hoping for a more dovish FOMC.  Two of the key stats of the report: 30% of business owners believe now is a good time to expand substantially and 38% of small business owners reported job openings that they couldn’t fill.  The job market is definitely tight.

The tight labor market is also reflected in the fact that nearly a quarter of all small business owners report that Labor Quality is their number one problem and another 9% cite labor costs as their biggest problem.  On a combined basis, labor issues were cited by just under a third of all small business owners, which is slightly more than the combined impact of Taxes and Red Tape.

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