Small business optimism remains near 43-year high

Customer at counter. (Zhu Zhu/MEDILL)

By Zhu Zhu

Small business optimism fell slightly, but remained near its highest level in 43 years, according to the National Federation of Independent Business.

The index fell 0.6 points to 105.3 in February from 105.9 in January. It was the third straight month of readings above 105, a surge that began after the election of President Donald Trump.

“It is clear from our data that optimism skyrocketed after the election because small business owners anticipated a change in policy,” said Juanita Duggan, NFIB president and CEO.

Small business optimism index. (Source: Trading Economics)

However, small business owners interviewed in Chicago said their optimism about their businesses has less to do with anticipated policy changes under the Trump administration than with their own efforts.

Frank La Fronza, owner of Spa Di La Fronza Salon, in downtown Chicago, said, “I’m optimistic about my business but I’m not a political person. I can’t change the politics. I get up early, I dress up, I work hard, with my good smile. I believe my business will run well because I work hard, and my store has a good reputation.”

Kathy Alekno, owner of Keys to Time, a key duplication store in Chicago, said, “I don’t think the new administration will affect my business. I’m optimistic because my business is very steady, and grows a little bit. We have many good comments on Yelp and have a very good reputation.”

The job openings component of the NFIB release reached its highest level since December 2000, but more owners reported difficulty finding qualified workers to fill open positions.

Fifty-two percent of small business owners reported hiring or trying to hire, but 44 percent said they found few or no qualified applicants.

“This is one of the tightest labor markets I have seen in the 43-year history of NFIB’s survey,” Dunkelberg said in the report.

The scarcity of qualified workers is pressuring owners to raise compensation to retain and attract good employee, Dunkelberg stated.

“The NFIB’s jobs-hard-to-fill series is also highly correlated with the jobs-plentiful series included in the Conference Board’s survey of consumer confidence. All these labor market indicators suggest that wage inflation should be running hotter,” said Ed Yardeni, chief investment strategist of Yardeni Research, in a blog post.

Photo at top: Customer at counter in downtown Chicago. (Zhu Zhu/MEDILL)