US NFIB Survey: October Optimism Index +0.8 to 103.8 - Text

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

of Independent Business' monthly Small Business Optimism index published

Tuesday:

     More small business owners last month said they expect higher sales and

think that now is a good time to expand, according to the October NFIB Index of

Small Business Optimism, released today.

     "Owners became much more positive about the economic environment last

month, which suggests a longer-run view," said NFIB Chief Economist Bill

Dunkelberg. "In the nearer term, they are more optimistic about real sales

growth and improved business conditions through the end of the year."

     The October Index rose to 103.8, up from 103 the previous month. The

historically strong performance extends the streak of positive months dating

back to last November, when it shot up immediately following the election.

     Four of the Index components rose last month. Five declined slightly, while

one remained unchanged. Outlook for expansion and sales expectations each jumped

six points, while job openings increased by five points.

     The tight labor market got tighter for small business owners last month,

continuing a year-long trend. Fifty-nine percent of owners said they tried to

hire in October, with 88 percent of them reporting no or few qualified

applicants. Hiring activity was particularly high in Florida and Georgia, as

construction firms are still trying to meet higher demand caused by the recent

hurricane.

     "Consumer sentiment surged based on optimism about jobs and incomes, an

encouraging development as consumers account for 70 percent of GDP," said

Dunkelberg. "We expect a pickup in auto spending as people in Texas and Florida

continue to replace cars that were damaged in the hurricanes. We expect the same

increase in home improvement spending, partly because of the hurricanes, but

also because of the skyrocketing price of homes."

     Optimism Components:        Seas Adj Level %         Change

     PLAN TO INCREASE EMPLOYMENT       18                -1

     PLAN TO INCREASE CAP. OUTLAYS     27                 0

     PLAN TO INCREASE INVENTORIES       4                -3

     EXPECT ECONOMY TO IMPROVE         32                 1

     EXPECT REAL SALES HIGHER          21                 6

     CURRENT INVENTORY                 -5                -2

     CURRENT JOB OPENINGS              35                 5

     EXPECT CREDIT CONDITIONS          -5                -1

     NOW A GOOD TIME TO EXPAND         23                 6

     EARNINGS TRENDS                  -14                -3

     TOTAL CHANGE                      --                 8

--MNI Washington Bureau; +1 212-800-8517; email: sara.haire@marketnews.com

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