NFIB's Small Business Optimism Index climbed in July, a signal to the growing labor market.
After five months of either stagnation or decline, NFIB’s Small Business Optimism Index finally showed increased optimism. In July, the Index increased by 1.6 points—from June’s 103.6 reading to last month’s 105.2—due to a surge in the labor market with job creation and more hiring.
Small business owners’ regained optimism in July indicates that they’re able to look past inaction in Congress on key reform, like healthcare and taxes. “Apparently economic activity in the second quarter was good enough to divert owner attention from the impotence of Washington lawmakers,” said NFIB Chief Economist Bill Dunkelberg in the report. “There’s nothing like more customers to make owners happy, and optimism held up as did important measures of spending and hiring plans.”
Reuters reviewed NFIB’s data and brought attention to the record number of small business owners that are planning to create jobs in July, which hit a seasonally adjusted net 19 percent that hasn’t been achieved since December 1999.
Sixty percent of owners said they hired or attempted to hire last month, which is a 6-point increase from June. However, of those hiring or trying to, 52 percent said that there were either minimal or no qualified workers. For 19 percent of owners, finding qualified workers is their top business problem, and this issue stands out, particularly in the construction and manufacturing industries.
MarketWatch noted the resiliency of consumer spending, which can be linked to the optimism in sales and the general business climate, in the NFIB report.
Like most Index reports, there is push and pull. Workers can benefit from the rise in hiring and job creation in July, “because they can command higher wages and better benefits,” said Dunkelberg. But, “the bad news is that small business employers are finding it very hard to hire and keep their workers.”
Although the surge in optimism can be marked as a victory, there’s still much reform needed, and that’s at the mercy of lawmakers. “Congress still holds the key to faster growth, so let’s hope they open the door,” said Dunkelberg.