US: NFIB small business optimism increased slightly to 104.8 in April - Nomura

Analysts at Nomura note that the US small business optimism increased slightly by 0.1pp to 104.8 in the NFIB’s April survey, continuing a string of elevated readings.

Key Quotes

“Part of the increase was driven by improved sentiment around quarterly earnings. The net percentage of firms planning to increase employment fell 4pp to 16%, matching a pullback in other survey employment indices. However, the net percentage of firms planning capital expenditures over the next three to six months rose 3pp to 29%.”

“Workers’ compensation trends seemed to accelerate over the first few months of 2018 as the net percentage of firms raising compensation remained elevated at 33%, the highest reading since 2000. However, this series has recently diverged from actual wage growth figures from the BLS.”

“While small businesses remain overwhelmingly optimistic about the economic outlook, it appears that these changes have yet to translate into economic behavior: BLS data on vacancy postings and hiring figures during 2017- present for small businesses (1-49 employees) indicate little change relative to the 2015- 16 trend, before optimism surged.”