Small-business optimism index up, price hikes planned

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Small business optimism gained in May, reacting to tax cuts and regulatory changes, while nearly one in five respondents expect to raise prices, the National Federation of Independent Business said Tuesday.

"Main Street optimism is on a stratospheric trajectory thanks to recent tax cuts and regulatory changes," said NFIB President and CEO Juanita Duggan. "For years, owners have continuously signaled that when taxes and regulations ease, earnings and employee compensation increase."

The Small Business Optimism Index rose to 107.8 in May from 104.8 in April. The May reading is the second highest in the survey’s 45-year history, trailing only a 108 reading in July 1983. Price increases are planned by 19% of respondents, the largest number since 2008, according to the survey.

"Small business owners are continuing an 18-month streak of unprecedented optimism which is leading to more hiring and raising wages," said NFIB Chief Economist Bill Dunkelberg. "While they continue to face challenges in hiring qualified workers, they now have more resources to commit to attracting candidates."

Several responses drew record high levels, including for compensation increases at a net 35%; earnings trends at a net 3%; sales trends are at the highest level since 1995; and “expansion plans are the most robust in survey history,” according to the release.

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