Small Business Optimism Index rises after election

William Dunkelberg

William Dunkelberg

A monthly measure of optimism among small business owners has topped its long-term average for only the third time since 2007 on more upbeat expectations following the election of Donald Trump as president.

The National Federation of Independent Business reported that its Small Business Optimism Index rose 3.5 points to 98.4 in November, just above the historical average of 98.

A separate measure of uncertainty jumped 12 points to 100, but could reflect the responses of owners rethinking plans about expansion and hiring.

The NFIB bases the optimism index on the results of monthly surveys of members of the small business advocacy group, most of them business owners. For November, the NFIB measured results before and after the election.

“The November index was basically unchanged from October’s reading up to the point of the election and then rose dramatically after the results of the election were known,” said Bill Dunkelberg, chief economist of the NFIB.

“Even without separating the data, the November results paint a starkly different picture than what we’ve seen in the last 94 months,” Dunkelberg added. “If higher optimism can be sustained, I expect that in coming months we’ll see an increase in business activity, such as hiring and expanding.”

Eight of 10 components of the index advanced, while one retreated and one remained unchanged.

The portion of small business owners who responded to the survey upon which the November index was based who expect the economy to improve surged 19 points to a net 12 percent. A net 11 percent of owners said they expect higher sales, up 10 points.

A net 15 percent of owners plan to increase staffing, up a point. Meanwhile, a net 31 percent of owners reported hard-to-fill job openings, up three points.

The share of owners who said they expect to increase inventories rose two points to a net 4 percent. The portion of those who said existing inventories are too low remained unchanged at a net negative 4 percent.

A net 24 percent of owners plan capital outlays over the next three months, down three points. A net 11 percent said they consider now a good time to expand, up two points.

The portion of owners who reported higher earnings edged up a point, but remained at net negative 20 percent.

The Business Times has served as the definitive source for Grand Junction business news since 1994. The journal offers news, views and advice you can use twice each month in print with daily updates online at www.TheBusinessTimes.com
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Posted by on Dec 13 2016. Filed under Business News. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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