US NFIB Survey: May Optimism Index +3.0 to 107.8 - Text

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

of Independent Business' monthly Small Business Optimism index published

Tuesday:

     The Small Business Optimism Index increased in May to the second highest

level in the NFIB survey's 45-year history. The index rose to 107.8, a

three-point gain, with small businesses reporting high numbers in several key

areas including compensation, profits, and sales trends.

     "Main Street optimism is on a stratospheric trajectory thanks to recent tax

cuts and regulatory changes. For years, owners have continuously signaled that

when taxes and regulations ease, earnings and employee compensation increase,"

said NFIB President and CEO Juanita Duggan.

     The May report hit several records:

- Compensation increases hit a 45-year high at a record net 35 percent.

- Positive earnings trends reached a survey high at a net three percent.

- Positive sales trends are at the highest level since 1995.

- Expansion plans are the most robust in survey history.

     In another interesting marker, a net 19 percent of small business owners

are planning price increases, the highest since 2008 and a signal of a strong

economy. A net three percent reported positive profit trends, up four points and

the best reading in the survey's history. In addition, a net 15 percent reported

higher nominal sales in the past three months, up an astonishing seven points

and the sixth consecutive strong month for sales.

     "Small business owners are continuing an 18-month streak of unprecedented

optimism which is leading to more hiring and raising wages," said NFIB Chief

Economist Bill Dunkelberg. "While they continue to face challenges in hiring

qualified workers, they now have more resources to commit to attracting

candidates."

     Small business owners continue to hire with a seasonally-adjusted net 18

percent planning to create new jobs. Twenty-nine percent of owners have job

openings for skilled workers, the third highest reading since 2000. Twelve

percent have job openings for unskilled workers, with the strongest demand in

the transportation, travel, communications, and utilities sector. To compete in

the job market, 35 percent of owners reported increases in labor compensation to

attract job applicants.

     The percentage of owners reporting capital outlays moved up one point to 62

percent, with 47 percent reporting spending on new equipment, 24 percent

acquiring vehicles, and 16 percent improving expanded facilities. Thirty percent

plan capital outlays in the next few months.

     Access to credit continues as a non-issue with 37 percent of owners

reporting all credit needs were satisfied and 43 percent saying they were not

interested in a loan, down seven points from last month and the lowest reading

since 2007. Only one percent reported that financing was their top business

problem. Owners planning to build inventories rose three points to a net four

percent, the nineteenth positive reading in the past 20 months.

     As reported in NFIB's May jobs report, 23 percent of owners cited the

difficulty of finding qualified workers as their Single Most Important Business

Problem, followed by taxes at 17 percent and regulations at 13 percent.

Fifty-eight percent reported hiring or trying to hire, up one point from last

month but 83 percent of those reported few or no qualified workers.

--MNI Washington Bureau; +1 202-371-2121; email: holly.stokes@marketnews.com

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