Small Business Optimism Beats Expectations, Near All-Time High in June

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Despite headlines full of trade war fears, American owners of small businesses remain very optimistic.

The Small Business Optimism Index posted its sixth-highest reading ever for the month of June, at 107.2, down 0.6 from May, The National Federation of Independent Business said Tuesday. Economists had expected a much steeper decline to 106.3.

“Small business owners continue to report astounding optimism as they celebrate strong sales, the creation of jobs, and more profits,” said NFIB President and CEO Juanita Duggan. “The first six months of the year have been very good to small business thanks to tax cuts, regulatory reform, and policies that help them grow.”

Small business optimism surged following the election of Donald Trump. Since December 2016, the Index has averaged an unprecedented 105.4, well above the 45-year average of 98 and close the all-time high of 108.0 in July 1983, the NFIB said.

Manufacturing and wholesale trades reported the strongest sales gains, according to the NFIB. Overall, a net ten percent of owners reported higher nominal sales in the past three months, one of the strongest readings in years despite dipping from the prior month. June was the seventh consecutive month of sales gains.

“There was a fractional decline in the Index from May to June, statistically insignificant. Small business owners are already seeing their bottom lines grow due to strong sales and regulatory relief and the new tax law is expected to push profits higher as the year progresses,” said NFIB Chief Economist Bill Dunkelberg.

Owners also reported that they plan to invest in additional inventories and create new jobs. The percent of owners with open positions tied the record high.

Owners say that their “single most important business problem” is finding qualified workers. Broader data on employee compensation released last week, however, indicate that average wages are not rising by very much. This may be an indication of retiring Baby Boomers being replaced with younger workers earning lower wages.

The trend for small business profits remains extremely positive.

“The frequency of reports of positive profit trends hit a record high in May, moving down only four percentage points in June, maintaining one of the best readings in the survey’s 45 year history,” the NFIB

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