Small business optimism soars, resulting in increased hiring and wages
The Small Business Optimism Index continued its impressive run in May, climbing to the second-highest level in history with small businesses reporting great numbers in several key areas.
The index rose by three points to 107.8 in May, while tax cuts and regulatory changes contributed to increased compensation, positive earnings and sales trends.
“Main Street optimism is on a stratospheric trajectory thanks to recent tax cuts and regulatory changes. For years, owners have continuously signaled that when taxes and regulations ease, earnings and employee compensation increase,” said National Federation of Independent Business (NFIB) President and CEO Juanita Duggan.
The May report included several record-setting data points. Employee compensation increases hit a 45-year high at a record net 35%, positive earnings trends reached a survey high at a net 3%, positive sales trends are at the highest level since 1995 and expansion plans are the most robust in survey history.
A net 19% of small business owners noted that they are planning price increases, the highest level since 2008 while a net 3% reported positive profit trends, the best reading in the survey’s history.
“Small business owners are continuing an 18-month streak of unprecedented optimism which is leading to more hiring and raising wages,” said NFIB Chief Economist Bill Dunkelberg. “While they continue to face challenges in hiring qualified workers, they now have more resources to commit to attracting candidates.”
Businesses are planning on growth, with 29% of business owners looking to hire skilled workers, while 12% are looking to hire unskilled workers. To help attract workers, 35% of owners said they are increasing labor compensation.
Access to credit continues as a non-issue with 37% of owners reporting all credit needs were satisfied with 43% saying they were not interested in a loan, the lowest reading since 2007.