Economic sentiment among American small business owners rebounded to 64.87 percent in September, the first reversal since sentiment began trending downward back in April. Last month optimism dropped by over two points (from 65.77 percent to 63.46 percent), representing the largest fall since February 2016—and this month, it’s back on the rise in our survey of 2,264 small businesses this month.
September’s increase in sentiment dovetailed with modest bumps in expected hiring and confidence in the overall economy.
Ideological Gap Shrinks
In January, we reported that the gap in overall economic confidence between self-reported conservative and liberals was considerable in the aftermath of the presidential election in November 2016. Eight months later, the gap in how partisans on each side of the aisle view their economic prospects has narrowed considerably.
While at the peak of the divide, confidence rates for conservatives and liberals differed by over 35 points, today that gap is roughly a third that size. Also of note: moderates have continued to hold the line as conservative and liberal economic confidence slowly leveled out.
Hiring Is Up
The percentage of small business owners seeking new employees grew by about half a percentage point in September, ticking up to 46 percent. As Fred J., a plumber is Oklahoma City explains, “I’m seeing a lot of the businesses in my area increase their numbers right now. My business is just me, but I’m seeing a lot of my competitors picking up new people.”
This small uptick represents a reversal from hiring trends in months passed. Hiring rates have remained at an impasse since May—this month is the first notable exception to that holding pattern.
Wages Remain Flat
While hiring saw a modest increase in September, the percentage of small business owners planning to increase their employee’s compensation dipped. Even though their payrolls are expanding, the dollar amounts small business owners are putting on their employee’s pay stubs are not.
While these two data points appear to be at odds, this is consistent with a pattern seen in the larger U.S. economy. It’s also not new: while overall hiring rates have increased since January, employee’s wages have not. Employee wages have remained roughly the same (or less than) what they were in the final months of 2016.
About the Thumbtack Economic Sentiment Survey
Every month, the Thumbtack Economic Sentiment Survey captures the attitudes and perspectives of thousands of business owners from across the country to gauge how they are feeling about the economy and their businesses. Now in its fifth year, this survey provides a unique vantage point on the economy, as respondents are largely mobile service professionals with five or fewer employees who operate across the United States. Because they are hard to reach, these professionals are frequently overlooked in other surveys of small businesses.