US NFIB Survey: August Optimism Index +0.9 to 108.8 - Text

     WASHINGTON (MNI) - The following are excerpts from the National Federation

of Independent Business' monthly Small Business Optimism index published

Tuesday:

     The NFIB Small Business Optimism Index soared to 108.8 in August, a new

record in the survey's 45-year history, topping the July 1983 highwater mark of

108. The record-breaking figure is driven by small business owners executing on

the plans they've put in place due to dramatic changes in the nation's economic

policy.

     The August survey showed:

     Job creation plans and unfilled job openings both set new records. The

percentage of small business owners saying it is a good time to expand tied the

May 2018 all-time high. Inventory investment plans were the strongest since 2005

and capital spending plans the highest since 2007. "Today's groundbreaking

numbers are demonstrative of what I'm hearing everyday from small business

owners - that business is booming. As the tax and regulatory landscape changed,

so did small business expectations and plans," said NFIB President and CEO

Juanita D. Duggan. "We're now seeing the tangible results of those plans as

small businesses report historically high, some record breaking, levels of

increased sales, investment, earnings, and hiring."

     A net 10 percent of all owners (seasonally adjusted) reported higher

nominal sales in the past three months compared to the prior three months, up

two points. August is the ninth consecutive strong month of reported sales gains

after years of low or negative numbers. The net percent of owners planning to

build inventories rose six points to a record net 10 percent, the 14th positive

reading in the past 22 months. The frequency of reports of positive profit

trends rose two points to a net one percent reporting quarter on quarter profit

improvements, the second highest reading in the survey's 45-year history.

     "At the beginning of this historic run, Index gains were dominated by

expectations: good time to expand, expected real sales, inventory satisfaction,

expected credit conditions, and expected business conditions," said NFIB Chief

Economist Bill Dunkelberg. "Now the Index is dominated by real business activity

that makes GDP grow: job creation plans, job openings, strong capital spending

plans, record inventory investment plans, and earnings. Small business is

clearly helping to drive that four percent growth in the domestic economy."

     As reported in last week's NFIB's monthly jobs report, a seasonally

adjusted net 26 percent of owners plan to create new jobs and 38 percent of

owners reported job openings they could not fill in the current period, both

survey highs. Sixty-two percent of owners reported trying to hire, with 89

percent of those owners reporting few or no qualified applications for their

open positions. A record 25 percent of owners cited the difficulty of finding

qualified workers as their Single Most Important Business Problem, up two points

from last month.

     The report concludes, "As a leading indicator of economic activity, the

Index turned up sharply late in November 2016 and headed to readings in the top

5 percent of the Index history in December, never looking back. Three months

later, economic activity soared, rising from 1.5 percent GDP growth to over 3

percent. Profits are driving the stock indices for 'small' firms to record

levels, mirroring the record levels of profit gains for NFIB firms."

     Optimism Components:        Seas Adj Level %     Change

     PLANS TO INCREASE EMPLOYMENT      26                 3

     PLANT TO MAKE CAPITAL OUTLAYS     33                 3

     PLANS TO INCREASE INVENTORIES     10                 6

     EXPECT ECONOMY TO IMPROVE         34                -1

     EXPECT REAL SALES HIGHER          26                -3

     CURRENT INVENTORY                 -3                 0

     CURRENT JOB OPENINGS              38                 1

     EXPECTED CREDIT CONDITIONS        -6                -2

     NOW A GOOD TIME TO EXPAND         34                 2

     EARNINGS TRENDS                    1                 2

     TOTAL CHANGE                   108.8                11

--MNI Washington Bureau; tel: +1 202-371-2121; email: kevin.kastner@marketnews.com

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