Economic Snapshot: Small business optimism falls, hiring rises

Small business optimism dropped this month, but hiring plans and wage growth in small businesses are showing strength.

Small business optimism

The NFIB Small Business Optimism Index fell 1.3 points to 94.8 in December. The decrease follows three months of no significant changes.

Fifty-five percent of business owners reported hiring or trying to hire, unchanged from the previous month, but 47 percent reported few or no qualified applicants for the positions they were trying to fill. Sixteen percent reported using temporary workers, up 2 points. Twenty-seven percent of all owners reported job openings they could not fill, which has remained unchanged for the past two months.

A seasonally adjusted new 11 percent plan to create new jobs, which is unchanged. A seasonally adjusted net 23 percent of owners reported raising worker compensation, up 2 points and at an expansion high. The net percent planning to increase compensation rose 3 points to a net 20 percent, which the NIFB says is historically strong for this recovery.

Employment situation

Total nonfarm payroll employment increased by 211,000 in November and the unemployment rate was unchanged at 5.0 percent. The number of unemployed persons held at 7.9 million.

Over the past 12 months, the unemployment rate and the number of unemployed persons are down by 0.8 percentage points and 1.1 million, respectively.

The number of long-term unemployed was little changed at 2.1 million in November and has shown little movement since June. In November, these individuals accounted for 25.7 percent of the unemployed.

The number of persons employed part-time for economic reasons increased by 319,000 to 6.1 million in November, following declines for the previous two months. Over the past 12 months, the number of persons employed for economic reasons is down by 765,000.

In November, 1.7 million persons were marginally attached to the labor force, down by 392,000 from the previous year. Among the marginally attached, there were 594,000 discouraged workers in November, little changed from the previous year.

JOLTS

The number of job openings was little changed at 5.4 million on the last business day in October, and the job openings rate was 3.6 percent. Job openings decreased in professional and business services by 137,000 and in the West region by 132,000.

The number of job openings increased over the 12 months ending in October for total nonfarm, total private and government. The number of job openings increased over the year in three of the four regions – the Northeast, South and Midwest – and was little changed in the West.

The number of hires was 5.1 million in October, little changed from the previous month, and the hires rate was 3.6 percent. Over the 12 months ending in October, the number of hires was little changed for total nonfarm and total private, and increased for total government.

There were 4.9 million total separations in October, little changed from September, and the separations rate was 3.4 percent. Within separations, there were 2.8 million quits in October, little changed from September. The number of quits has held between 2.7 million and 2.8 million for the past 14 months.