June Small Business Optimism Index dips 0.6 points but still at high level

The Small Business Optimism Index posted its sixth highest reading in survey history for the month of June, at 107.2, down 0.6 from May. Since December 2016, the Index has averaged an unprecedented 105.4, well above the 45-year average of 98 and rivaling the all-time high of 108.0 in July 1983.

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May Small Business Optimism Index rose 3 points to near-record level

The Small Business Optimism Index increased in May by three points to 107.8, to the second-highest level in the NFIB survey's 45-year history. Respondents reported high numbers in several key areas including compensation, profits, and sales trends.

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Small Business Optimism Index rose to 104.8 in April, marking 17 months of increases

The Small Business Optimism Index sustained record-high levels for the 17th straight month, increasing to 104.8 in April and driven by reports of improved profits, the highest in the NFIB Small Business Economic Trends Survey's 45-year history.

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March small business optimism dips slightly from record highs

The small business optimism index reached its 16th consecutive month in the top five percent of 45 years of survey readings. The 104.7 March reading, down from 107.6 in February, remains among the highest in survey history and for the first time since 1982, taxes received the fewest number of votes as the number one problem.

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December Small Business Optimism Index dips slightly, but 2017 strongest year in survey history

The Optimism Index for last month came in at 104.9, slightly lower than the near-record November report but still a historically exceptional performance. That makes 2017 the strongest year ever in the history of the survey. The average monthly Index for 2017 was 104.8. The previous record was 104.6, set in 2004.

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November Small Business Optimism Index rises to highest level in 34 years

Not since the roaring Reagan economy has small business optimism been as high as it was in November, according to the National Federation of Independent Business (NFIB) Index of Small Business Optimism, rising another 3.7 points in November to 107.5.

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Small Business Optimism Index fell by 2.3 points in September to 103

The NFIB Index of Small Business Optimism tumbled in September from 105.3 to 103 led by a steep drop in sales expectations, not just in hurricane-affected states, but across the country.

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Small Business Optimism Index rose another 0.1 points, maintaining high levels since last November

The NFIB Index rose 0.1 points to 105.3. Five of the components increased, while five declined. The lofty reading keeps intact a string of historically high performances extending back to last November.

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Small Business Optimism Index rose 1.6 points in July

The Index of Small Business Optimism rose 1.6 points to 105.2 in July, preserving the surge in optimism that started the day after the election. Seven of the 10 Index components posted a gain, two declined, and one was unchanged.

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Second Quarter 2017 Economic Update: Slow, Steady Growth as Expansion Continues

Whether due to an actual “Trump bump” or other factors, so far the data is showing the second quarter of 2017 to be stronger than the first on multiple fronts.  Despite its relative age – which in another two years would be the longest recovery on record – the current expansion is still showing signs of life ahead.

According to the Federal Reserve’s Beige Book, the pace of recent growth has ranged from slight to modest, although there has been a mixed message on consumer spending, especially for auto sales, which were down three percent between the first and second quarters of 2017.

Still, this dip was reportedly partly due to automakers holding back on fleet sales to rental car companies and government agencies in order to help prop up brand values.

GDP growth, which averaged just 1.6 percent in 2016, did dip to 1.4 percent in the final estimate for the first quarter of 2017.  However, as of mid-July, analysts were projecting second quarter 2017 growth to rise to 2.4 percent due to improvements in construction spending, a rebounding manufacturing sector and continuing pent-up demand for housing.

Job growth averaged nearly 194,000 new positions per month in the second quarter, up substantially from under 170,000 in both the previous quarter as well as the same quarter of 2016, resulting in a June unemployment rate of 4.4 percent.  Labor markets continued to tighten across a wide spectrum of both low- and high-skilled positions, especially in construction and information technology.

However, as has been reported in the past, a wider range of industries are also reporting difficulty in finding qualified workers even as the expansion reaches into the furthest corners of the economy, including teenagers.  This shortage has certainly had some benefits for employees, with rising wage pressures for both low- and high-skilled positions prompting annual increases averaging about 2.5 percent.

Due in part to this relatively minor wage pressure, overall inflation remains low, with the Consumer Price Index (less food and energy) rising by 1.7 percent for the year ending in June 2017, or below the 2.0 percent target rate preferred by the Federal Reserve.  The Producer Price Index was slightly higher for the same period, rising by 2.0 percent for final demand minus more volatile indices for food, energy and trade services.

Looking next at consumer confidence, although the University of Michigan’s Consumer Sentiment Survey had been on a high plateau since last November, preliminary results for July were showing a split between future expectations – which have fallen sharply since their January 2017 peak – and current economic conditions, which have since rebounded to their March 2017 peak.  Moreover, given the small June dip in the Small Business Optimism Index, it’s possible that expectations for prolonged GDP growth rates of three percent in the future have softened, and what we’re likely to see is an annual growth rate of just above two percent for 2017.

Builder confidence remained bullish at a reading of 67 in June, and while the average for total construction spending in April and May of 2017 was down slightly from the first quarter of 2017, residential spending was up by one percent.  Even better, when compared against the second quarter of 2016, average residential construction spending in April and May was up by ten percent.

Although this extra spending did not show up meaningfully in the field during April or May, it certainly did in June, with both starts and permits rebounding sharply from May. In addition, year-on-year housing starts and permits for June were up by 2.1 percent and 5.1 percent, respectively.

New home sales, however, were up by over 11 percent during the same time periods to an annual rate of 610,000 units, while median new home prices rose to nearly $346,000.  At May’s sales rate, existing inventory would take 5.3 months to sell, up slightly from 5.2 months a year earlier.

For existing homes, the biggest challenge remains available inventory, with the pending home sales index dipping in both April and May from earlier in the year as the median sale price rose to $247,600.  This level marks a new peak, and is up 5.8 percent year-on-year.

Closed sales averaged 5.59 million in April and May of 2017, down 0.53 percent from the first quarter but up over four percent from the second quarter of 2016.  At current sales rates, inventory at the end of May would take 4.2 months to sell, down from 4.7 months a year earlier.

May Small Business Optimism Index remained at historically high level

The Index for May matched its strong performance in April of 104.5. That means the Index has been at a historically high level for six straight months. Five of the Index components posted a gain, four declined, and one remained unchanged.

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Small Business Optimism Index slips in April but still at historically high levels

The Index dipped 0.2 points April, settling at 104.5. April was the sixth straight month for historically high optimism, a hot streak not seen since 1983. Five of the Index components posted a gain, reaching levels not seen since before the previous administration. Three of the components declined, and two were unchanged. Nearly all of the slight decline was attributable to an 8-point plunge in expected business conditions.

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