Small Business Optimism Index Surges to Historically High Levels

Julija A. Image
ByJulija A.
June 12,2019

Small business owners seem to be in high spirits since May 2019. According to the National Federation of Independent Business, the index of small business optimism is the highest it’s been since October—105.0 points. This surpasses economists’ predictions (102.0 points) and indicates a positive change for a lot of companies.

The index had been in decline before February 2019, when it started slowly increasing, eventually reaching historically high numbers last month as six components improved, one fell, and three were unchanged.

Reports show that 30% of firms plan to increase their capital spending, while the share of companies expecting to raise selling prices fell to 20%, which may slow down pricing power. Despite trade uncertainty, businesses are expecting more favorable prospects.

Based on a survey of 650 small businesses, 9% of firms reported higher nominal sales in the past three months.

Here’s some more interesting data: according to the NFIB survey, 62% of small businesses are trying to hire more workers in their field, but 54% of them report difficulties with finding competent employees for the positions that need to be filled. This seems to be a common struggle for a lot of small companies, as 24% of owners said that finding qualified workers is the single biggest challenge they face.

According to some economists, the claim that there aren’t enough professionals available is grossly overstated. Businesses could find better workers if they increased pay and benefits, especially in highly-competitive industries. Despite these claims, NFIB states that the increase in compensation is the highest it’s been since 1973. More owners are starting to understand the benefits of offering competitive salaries when searching for talent. It’s important to bear in mind that there are fewer Americans in the labor force now than there were a decade ago.

An impressive 64% of companies also reported increased spending on capital equipment, which is a six-point gain since February 2018.

This general optimism is driving the workforce forward and encouraging firms to hire more skilled workers. We can also expect more startup openings in the upcoming months, as analysts predict positive reports will motivate people to open their own firms.

Given the May readings, it would seem that most small businesses are looking forward to branching out and growing their companies. This kind of enthusiasm needs to be nurtured if we are to ensure healthy economic progress.

About the author

Julia A. is a writer at SmallBizGenius.net. With experience in both finance and marketing industries, she enjoys staying up to date with the current economic affairs and writing opinion pieces on the state of small businesses in America. As an avid reader, she spends most of her time poring over history books, fantasy novels, and old classics. Tech, finance, and marketing are her passions, and she’s a frequent contributor at various small business blogs.

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