The National Federation of Independent Business (NFIB) reported on Tuesday the Small Business Optimism Index increased by 0.6 points to 102.4 in October, following a 1.3-point decline in September.

According to the report, the October gain in the headline index was buoyed by advances in eight of the 10 components, led by GDP-producing plans for job creation, inventory investment, and capital spending, while talk of a recession waned. Actual job creation in October exceeded that in September, as small businesses continued to hire and create new jobs. Reports of actual capital spending increased and inventory investment improved from a modest negative level in September. The reported increase in sales put pressure on inventory stocks, reducing them. Owners reporting inventory increases remained unchanged at a net 0 percent. Meanwhile, the uncertainty index fell 4 points but remains historically high heading into an election year.

“Labor shortages are impacting investment adversely - a new truck, or tractor, or crane is of no value if operators cannot be hired to operate them,” noted NFIB Chief Economist William Dunkelberg. “The economy will likely remain steady at its current level of activity for the next 12 months as Congress will be focused on other matters, and an election cycle will limit action. Any significant change in trade issues will impact financial markets more than the real economy during this period. Adjustments to a new set of ‘prices,’ such as tariffs, will take time.”