Press comment: US small business confidence hits record highs

If you’re covering the latest NFIB survey, which shows record levels of small business confidence in the US, please see the following commentary from Quilter Investors portfolio manager Sacha Chorley:

“Economic data from the US continues to go from strength to strength. Small business owners are feeling extremely bullish, with a 108.8 confidence score representing the highest figure ever recorded, topping the previous high set in 1983. Smaller companies employ around a fifth of the workforce in the States. Today’s data print indicates that optimism is permeating through to them and isn’t confined to the mega-cap household names that have been associated with US stock market growth in the last year. Capital expenditure plans are also at their highest level in over a decade, showing that businesses are expecting to plough bumper corporate profits back into growth projects. Corporate tax cuts that have boosted profits are being re-invested in long-term growth, not simply passed on to shareholders.

“The only potential headwind in the data could be a tightening labour market, which creates upward pressure on pay. Payroll growth currently sits just under 3%, but this could be expected to increase as a result of labour market pressures. Projections for the labour market continue to look strong, with companies expecting to keep onboarding new staff and creating new openings, which will keep the unemployment level down. Likewise the ‘quit rate’ due to be published later today, which shows how many workers are leaving their jobs expecting to find a better role elsewhere, is likely to show continued confidence among employees. And the data this morning shows that over half (55%) of new job openings are not attracting enough skilled applicants. That all points to tight labour conditions, with businesses having to increase wages to attract the right calibre of staff.”

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