Earlier today, we learned that the
National Federation of Independent Businesses (NFIB)small business optimism index slipped to 93.9 in September from 94.1 in August.
But it’s what they said about jobs continues to be encouraging. Here’s Deutsche Bank’s Joseph LaVorgna (emphasis added):
According to the September results, the net percentage of small businesses planning to increase employment totaled +9% last month, down from a revised August reading of +10% (it had been initially reported at +16%) and in line with what was reported in July (+9%). Over the past three months, hiring intentions are at their highest reading since February 2008 (+10%). But as we can see in the chart below, the trend in hiring was pointing noticeably downward in early 2008. That is not the case presently, as hiring intentions are clearly rising. This improvement in labour market sentiment is also consistent with the ongoing decline in initial jobless claims, which have made a new cyclical low, even after adjusting for the distortion in California. Incidentally, the weekly claims data will continue to be reported during the government shutdown because the program is administered at the state level.
What is our take-away from the NFIB? One, the improvement in hiring intentions hints that the slowdown in nonfarm payrolls seen through August, when the three-month moving average slowed to +148k from +200k earlier in the year, is temporary. Two, the NFIB data also suggest that the Affordable Care Act (i.e., ObamaCare) is at best having only a limited impact on small business hiring plans at least at the moment.
Under the employer mandate of Obamacare, businesses employing 50 or more workers are forced to offer health insurance or pay a penalty of $US2,000 per full-time worker (i.e., those working over 30 hours per week).
Obamacare critics have warned that the new law would cause smaller businesses to cut back hiring and cut back hours.
For the most part, the evidence has been inconclusive.
Today’s NFIB report offers more evidence that Obamacare’s naysayers are wrong.
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