US NFIB Survey: November Optimism Index -2.6 to 104.8 - Text

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

of Independent Business' monthly Small Business Optimism index published

Tuesday:

     Small business optimism posted a modest decline in November with a reading

of 104.8, while continuing its exceptionally strong two-year trend, according to

the NFIB Small Business Optimism Index. Slightly more than half of the decline

was attributable to Expected Business Conditions and Expected Real Sales.

Increases in compensation tied a near 30-year high as owners seek to attract

more qualified candidates. An increasing percentage of owners reported capital

outlays and higher sales.

     "Small business owners are enthusiastic about the economy and have

demonstrated their optimism by raising wages, creating new jobs, and investing

in their businesses throughout 2018," said NFIB President and CEO Juanita D.

Duggan. "Overall, small business owners have shown a historic trend in optimism

for their businesses and the economy and continue to be the driving force behind

economic growth."

     When viewing the responses received prior to and after the election, the

value of the Index was basically unchanged after the election results were

known. For the entire November sample, capital spending and job creation plans

improved. Job openings lost four points but remained very strong. Inventory

investment plans declined but remained positive as owners reported additions to

current stocks. Expected real sales and expected business conditions six months

out fell four and eleven points respectively, and the percent viewing the

current period as a good time to expand fell one point.

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

nominal sales in the past three months, up one point and historically very

strong. Thirty percent or more of the owners in construction, manufacturing,

retail, and transportation reported quarterly improvements in sales.

     Plans to raise compensation rose two points to a net 25 percent, the

highest since 1989, a response to persistently high levels of unfilled open

positions. Reports of higher worker compensation were unchanged at a net 34

percent of all firms, remaining very strong.

     Sixty-one percent of owners reported capital outlays, up two points from

October, with 45 percent of those making expenditures, purchasing new equipment

(up two points), 22 percent acquiring vehicles (down four points), and 18

percent improving or expanding facilities (unchanged). Twenty-nine percent plan

capital outlays in the next three to six months, down one point, but among the

strongest readings in the recovery period. Plans to invest were most frequent in

manufacturing (34 percent), transportation (32 percent), and the wholesale

trades (38 percent).

     "Small business employs about half of the private workforce, so investment

and training in that sector is critical to improving overall worker productivity

over the next five years," said NFIB Chief Economist Bill Dunkelberg.

     As reported in the November jobs report, small business job creation

increased slightly, rising to a net addition of 0.19 workers per firm. Sixteen

percent of owners reported increasing employment an average of 2.9 workers per

firm, unchanged from October, and 11 percent reported reducing employment and

average of 1.9 workers per firm. Matching the August 2018 record high and up two

points from last month, 25 percent of owners cited the difficulty of finding

qualified workers as their 'Single Most Important Business Problem.'

     Optimism Components:        Seas Adj Level %     Change

     PLANS TO INCREASE EMPLOYMENT      22                 0

     PLANT TO MAKE CAPITAL OUTLAYS     29                -1

     PLANS TO INCREASE INVENTORIES      2                -3

     EXPECT ECONOMY TO IMPROVE         22               -11

     EXPECT RETAIL SALES HIGHER        26                -4

     CURRENT INVENTORY                 -5                -3

     CURRENT JOB OPENINGS              34                -4

     EXPECTED CREDIT CONDITIONS        -5                 0

     NOW A GOOD TIME TO EXPAND         29                -1

     EARNINGS TRENDS                   -4                -1

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

[TOPICS: MTABLE,MAUDS$,M$U$$$]