Small Business Optimism Index climbs to eight-year high

William Dunkelberg
William Dunkelberg

A monthly measure of optimism among small business owners has climbed to its highest level in more than eight years on more upbeat expectations for sales, hiring and capital outlays.

The National Federation of Independent Business reported that its Small Business Optimism Index rose 2.3 points to 100.4 in December. That’s the highest reading since October 2006.

“The December index shows much broader strength, led by a significant increase in the number of owners who expect higher sales. This could be a breakout for small business. There’s no question that small business owners are feeling better about the economy. If they continue to feel that way, 2015 could be a very good year,” said Bill Dunkelberg, chief economist of the NFIB.

The NFIB bases the index on the results of monthly surveys of small business owners who belong to the advocacy group. For December, eight out of 10 components of the index advanced.

The proportion of small business owners responding to the survey upon which the December index was based who expect the economy to improve over the next six months actually slipped a point to a net 12 percent.

Nonetheless, the share of owners who expect increased sales jumped six points to a net 20 percent. Just 11 percent of owners cited weak sales as their most pressing business problem, one of the lowest reading since December 2007.

A net 15 percent of owners said they plan to increase staffing, up four points. A net 25 percent of owners reported hard-to-fill job openings, up a point.

The proportion of owners who said they plan to make capital outlays over the next three to six months rose four points to a net 29 percent. A net 16 percent of owners said they consider now a good time to expand, up five points.

The share of owners who plan to increase inventories rose three points to a net 5 percent.

Reports of positive earnings trends rose two points, but remained at a net negative 15 percent.