US: Small business owners are looking forward to tax reform - Wells Fargo

The Small Business Optimism jumped 3.7 points in November to 107.5, with 8 of the 10 components posting Increases, gains brought Small Business Optimism to its highest level in 34 years, pointed out analysts from Wells Fargo. 

Key Quotes: 

“The improved prospects of meaningful tax reform have provided a significant boost to small business confidence. The National Federation of Independent Business (NFIB) Index of Small Business Optimism rose 3.7 points in November to 107.5, bringing the closely watched index to its second-highest level in its 44-year history. Eight of the 10 components of the survey increased during the month, with most of the gain coming from a 16-point jump in Expected Business Conditions and a 13-point rise in Sales Expectations. The improvement in small business confidence is meaningful and suggests employment growth and business fixed investment should maintain strong momentum going into the new year.”

“Now, with the prospects of meaningful tax reform seemingly within reach, small business confidence has risen even further.”

“While hiring plans rose, actual hiring moderated. Thirteen percent of firms reported hiring workers, while 10 percent said they reduced employment. Fifty-two percent of business owners either hired workers or tried to hire workers, but 44 percent reported they had few or no qualified applicants. Difficulty finding qualified workers has become a more critical problem for business owners, particularly for construction firms and manufacturers.”

“The improvement in Small Business Optimism suggests tax reform may provide a more meaningful boost to economic growth in 2018. Small Business Optimism picked up well ahead of the economy as a whole in 2017, and major changes in the index have proven to be a reliable leading indicator, particularly for capital spending and employment.”