US NFIB Survey: Sept Optimism Index -0.9 to 107.9 - 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 continued its historic 23-month

positive trend, with a reading of 107.9 in September, the third highest reading

in the survey's 45-year history. In the small business half of the economy, 2018

has produced 45-year record high measures of job openings, hiring plans, actual

job creation, compensation increases (actual and planned), profit growth, and

inventory investment.

     The September 2018 survey showed:

     Actual capital spending in the past few months rose significantly. Average

employment change per firm was solid. Owners bulked up inventories. Compensation

increases set a new record. "This is the longest streak of small business

optimism in history, evidence that tax cuts and regulatory rollbacks are paying

off for the economy as a whole," said NFIB President and CEO Juanita D. Duggan.

"Our members say that business is booming and prospects continue to look

bright."

     Actual investment spending improved as prospects for the economy remain

strong. Sixty percent of owners reported capital outlays, up four points from

August. Of those making expenditures, 41 percent reported spending on new

equipment (up two points), 26 percent acquired vehicles (up four points), and 16

percent improved or expanded facilities (down two points).

     Consumer spending temporarily slowed in August, likely producing excess

inventories but has picked up again which will reverse the build-up. The net

percent of owners expecting higher real sales volumes rose three points to a net

29 percent of owners. Owners reporting inventory increases rose one point to a

net five percent (seasonally adjusted). Strong expectations for higher real

sales translate into higher expected returns on capital investments as well as a

need for more employees.

     "The economy continues to deliver a spectacular performance considering its

record length. Small business owners continue to face labor force challenges but

are increasing compensation to keep up," said NFIB Chief Economist Bill

Dunkelberg. "With profits and investment remaining strong, our hope is that

policymakers will stay the course and not screw around with success."

     A record net 37 percent of owners reported raising overall compensation, as

reported in last week's NFIB monthly jobs report. This surpasses the previous

record of a net 35 percent in May 2018. Twenty-four percent plan to increase

total compensation at their firm and six percent plan reductions. Sixty-one

percent of owners reported hiring or trying to hire, with 87 percent of those

reporting few or no qualified workers. Thirty-eight percent of owners reported

job openings they could not fill in the current period, unchanged from last

month.

     Optimism Components:        Seas Adj Level %     Change

     PLANS TO INCREASE EMPLOYMENT      23                -3

     PLANT TO MAKE CAPITAL OUTLAYS     30                -3

     PLANS TO INCREASE INVENTORIES      3                -7

     EXPECT ECONOMY TO IMPROVE         33                -1

     EXPECT RETAIL SALES HIGHER        29                 3

     CURRENT INVENTORY                 -1                 2

     CURRENT JOB OPENINGS              38                 0

     EXPECTED CREDIT CONDITIONS        -5                 1

     NOW A GOOD TIME TO EXPAND         33                -1

     EARNINGS TRENDS                   -1                -2

     TOTAL CHANGE                                       -11

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

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