US: Small business confidence cools slightly but remains upbeat – TD Economics

Admir Kolaj, Economist at TD Economics, points out that the US NFIB's small business optimism index fell 0.2 points to 104.5 in April and as the headline print came in above expectations for a reading of 104, but it nonetheless marked the third consecutive monthly softening.

Key Quotes

“Still, the level of optimism has remained at the top end of the range of historical highs since late last year.”

“Moves in the subcomponents of the index were mixed, with three falling, five rising and the rest remaining unchanged. Expectations that now is a good time to expand (24 percent) and higher real sales (20 percent) improved two points apiece. But, expectations regarding the economy pulled back a notable 8 points to 38 percent. While the three indicators remain elevated, the last two have retracted considerably from the cyclical peaks of 31 percent and 50 percent in December.”

“Capital investment plans pulled back 2 points to 27 percent, while plans to increase employment remained unchanged at 16 percent. On a trend basis, both are seeing some of the best readings since prior to the recession. Having said that, while hiring plans are generally back near their precrisis peak, capital outlay plans still have a considerable way to go.”

“Other labor market indicators remained largely upbeat, with unfilled job openings rising 3 points to 33 percent – the best print since 2000. The share of firms increasing worker compensation pulled back 2 points to 26, while the share of firms 'planning' to increase compensation remained unchanged at 18, with both index readings remaining near post-recession highs.”

“The sub-index gauging the level of uncertainty moved down 10 points but at 83 still remained elevated and far from the historical median of 66.”