The August 2018 National Federation of Independent Businesses (NFIB) Small Business Optimism Index for August hit a new all-time high of 108.8, beating out the old record of 108.0 set in July 1983. The NFIB Small Business Optimism Index has been tracking this metric for 45 years overall.
This index gauges a small business sentiment as NFIB measures in terms of optimism and expectations translating into actual initiatives taken by small businesses.
According to a press release published by the NFIB, “Expectations (are) translating to growth, profits, and jobs according to NFIB’s leading indicator survey.” It further stated that the August report was, “…topping the July 1983 highwater mark of 108. The record-breaking figure is driven by small business owners executing on the plans they’ve put in place due to dramatic changes in the nation’s economic policy.”
The August survey showed:
“Today’s groundbreaking numbers are demonstrative of what I’m hearing everyday from small business owners – that business is booming. As the tax and regulatory landscape changed, so did small business expectations and plans,” said NFIB President and CEO Juanita D. Duggan. “We’re now seeing the tangible results of those plans as small businesses report historically high, some record breaking, levels of increased sales, investment, earnings, and hiring.”
A net 10 percent of all owners (seasonally adjusted) reported higher nominal sales in the past three months compared to the prior three months, up two points. August is the ninth consecutive strong month of reported sales gains after years of low or negative numbers. The net percent of owners planning to build inventories rose six points to a record net 10 percent, the 14th positive reading in the past 22 months. The frequency of reports of positive profit trends rose two points to a net one percent reporting quarter on quarter profit improvements, the second highest reading in the survey’s 45-year history.
As reported in last week’s NFIB’s monthly jobs report, a seasonally adjusted net 26 percent of owners plan to create new jobs and 38 percent of owners reported job openings they could not fill in the current period, both survey highs. Sixty-two percent of owners reported trying to hire, with 89 percent of those owners reporting few or no qualified applications for their open positions. A record 25 percent of owners cited the difficulty of finding qualified workers as their Single Most Important Business Problem, up two points from last month.
Other take-aways are:
+ Not all booms are the same
+ Booms are sector specific (note: all the retail closures, note the decline of financial advisors such as stock brokers)
+ Booms usually identify emerging sectors (though they do not immediately follow. Example: the Internet bust was followed by the explosion of the digital platform as a must-have.
+ Booms also have country-centric – meaning not all nations will participate in a boom.