Earlier today, we learned that the National Federation of Independent Business (NFIB) small business optimism index fell 0.1 point to 94.0 in August.
“While the total reading showed essentially no change over the month prior, a look at the individual indicators reveals incongruent details,” wrote the NFIB in their announcement.
“Job creation plans leapt to a level not seen since before the recession and sales expectations improved; but this optimism would appear to contravene the dramatic deterioration in quarter to quarter sales and profit trends,” they continued. “The favourable employment plans also contrasted sharply with the increasingly negative expectations for improved general business conditions. The month’s performance proved poor, but expectations, pre-Syria, were looking up.”
While the NFIB is still scratching their heads, Deutsche Bank’s Joe LaVorgna is taking it as a reason to be optimistic.
“This is the largest monthly gain and the highest reading in this series since January 2007, a month which experienced nonfarm payrolls gains of +234k and private payroll gains of +227k,” he said of the the job creation plans. “Indeed, before the last economic downturn, a +16% reading on small business hiring intentions was generally consistent with monthly nonfarm payrolls gains in the vicinity of +200k, a bit faster than the +184k gain seen over the past year.”
LaVorgna thinks the NFIB’s report means the disappointing August jobs report we got on Friday will be tweaked in coming months.
“This suggests to us that either August nonfarm payrolls will be revised higher or that we will see a noticeable improvement in nonfarm payrolls this month or sometime very soon,” he added. “For the record, August nonfarm payrolls have had a tendency to be revised up over the past decade. In point of fact, it has happened in seven out of the last 10 years with an average upward revision of +50k. At minimum, the August NFIB data suggest the recent slowdown in hiring is temporary.”
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