US: Small Business optimism declines in June but owners remain upbeat - Wells Fargo

The National Federation of Independent Business Small Business Optimism index dropped in June to 107.2. Analysts at Wells Fargo point out that the index remains near an all-time high and noted that sales are rising but labor remains in short supply.

Key Quotes: 

“Small business owners remain positive about the current operating environment but may be a little wary about the potential impact of the ongoing trade dispute. The National Federation of Independent Business (NFIB) Small Business Optimism index fell 0.6 points in June to 107.2. While down slightly from the prior month, small business optimism remains at an exceptionally high level and has averaged 106.5 through the first half of 2018. Business owners also appear to be pleased with policy changes enacted over the past couple of years, particularly the easing of burdensome regulations and tax reform, which is encouraging more firms to invest in new equipment and expand their operations.”

“Many of the key components of the Small Business Optimism index fell in June but most remain near cycle highs.”

“With labor markets tight, small businesses are generally having to boost compensation in order to attract and retain workers. The net share of firms raising compensation fell 4 points in June to 31 percent, while the net share of firms planning to raise compensation rose 1 point to 21 percent. The net share of firms raising prices fell 5 points to 14 percent.”

“Most of the key components of the small business survey gave back some of the exceptionally strong gains from the prior month.”

“One area that posted a notable improvement in June was the net share of businesses reporting that loans were harder to get, which fell to just 2 percent and is about as low as it has ever been.”