US Small business optimism improves slightly, some worries if future sales persist

US NFIB's small business optimism index edged up 0.2 points in September, landing at 96.1, precisely in line with the six-month moving average. The reading came in above market expectations, which called for a slight pullback in the index to 95.5.

Recent economic indicators have generally substantiated the notion that the U.S. economy is not immune to the slowdown in global growth. Fortunatel;y, small businesses tend to be more shielded from external factors given their domestically oriented business model. 

The report corroborates that viewpoint having climbed slowly but steadily for three consecutive months, with this morning's results broadly encouraging, especially given the improved view on the economy and the pickup in business expansion plans.

The slight pullback in labor market indicators is somewhat disappointing. But, looking past some inherent monthly volatility, they remain near post-recession highs. Additionally, signs of potential wage gains are a bright spot in today's report, with the net share of firms planning to raise worker compensation in the next three months at the highest level since December 2014.

Small and medium businesses continue to be concerned about future sales, with the pullback in the sales outlook in September running somewhat contrary to the improved feelings about the economy. 

"Still, this subcomponent should see some improvement in the months ahead as domestic demand remains robust, buoyed by the windfall from lower gasoline prices and improving labor market outcomes, which should support consumers' purchasing power well into next year", says TD Economics.