Analysts at Wells Fargo note the data released today showed that the NFIB Small Business Optimism Index climbed to 104.7 in November, signaling that small business owners feel better about the overall economy and are looking to expand and hire more workers.

• “Small business optimism rose solidly in November, with the overall index rising 2.3 points to 104.7, just slightly below its cycle high. Seven of the 10 index components rose during the month, with earnings trends jumping 10 points. Business owners appear to have a clearer view of the business environment. The NFIB Uncertainty Index fell six points in November, following a four-point drop the prior month, and is now at its lowest level since May 2018. The drop in uncertainty may reflect some rising optimism that trade deals will be reached with Mexico and China.
• The improvement in small business confidence likely reflects stronger sales in recent months, as well as some drawdown in inventories. A net 12% of business owners reported higher sales in the past three months, up eight points from the prior report and the highest level since May 2018. The strength in sales has helped curb inventories.
• The employment components of the NFIB survey all came in exceptionally strong.
• The strength in the employment components is becoming increasingly evident in the compensation data. Average hourly earnings for production and nonsupervisory workers have a fairly tight correlation with the share of businesses citing the quality of labor as their number one challenge.”