America's small business owners joined their corporate and consumer counterparts in unabashed optimism about the current and future state of the U.S. economy.
The National Federation of Independent Business (NFIB) survey released Tuesday reported that attitudes among small business owners were the most positive in 34 years driven by rising sales prospects and improving economic conditions. The survey index rose 3.7 points to 107.5 in November from 103.80 the prior month. The median estimate was 104.0.
The NFIB is one of the longest running indicators of business economic sentiment (January 1975) and this is the second highest score on record. Only the July 1983 reading of 107.67, at the height of the Reagan boom, was stronger. The 20 month ascent from 92.6 in March 2016 to this month is also the second steepest on record. It is bested solely by that from the depth of the 1980 recession in April 1980 at 80.09 to 99.0 107.67 15 months later in July 1981.
Results among businessmen mirror, perhaps not surprisingly, consumer sentiment. The Conference Board noted on the 28th of last month that its consumer confidence index jumped to 129.5 in November, the highest reading for this gauge since November 2002. The measure of present conditions improved to 153.9, its best since June 2001. Consumer expectations for their situation in six months advanced to 113.3, the most sanguine American households have been since September 2000.
Likewise, the Institute for Supply Management reported that its survey of corporate purchasing managers reached a 14 year high in September at 60.8. It was only the third time in 30 years that this gauge has been above 60.
Consumers whose spending constitutes about 70 percent of U.S. economic activity have been buoyed by a robust labor market, 228,000 jobs were created in November, according to the Labor Department. The 31,000 manufacturing jobs staffed, which followed August’s 44,000, were two of the best results for factory employment in the past decade.
Equity markets are booming as well having set multiple records since the election of Donald Trump last November.
Although wage increases are below their historical averages, held back by the large pool of unemployed workers indicated by the 39 year low in the labor force participation rate, as long as the economy continues to run strongly, labor shortages will eventually draw unemployed workers into the labor force, further boosting consumption and wages.
Chief Market Strategist
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