A monthly measure of optimism among small business owners has climbed to its second highest reading on more upbeat expectations for improving economic conditions and sales.
“Small business owners are exuberant about the economy, and they are ready to lead the U.S. economy in a period of robust growth,” said Juanita Duggan, president and chief executive officer of the National Federation of Independent Business.
The NFIB reported its Small Business Optimism Index jumped 3.7 points to 107.5 in November. That’s the highest level in 34 years and second-highest reading in the 44-year history of the index.
The NFIB bases in the index on the results of monthly surveys of members of the small business advocacy group, most of them small business owners. For November, eight of 10 components of the index advanced
“The NFIB indicators clearly anticipate further upticks in economic growth, perhaps pushing up toward 4 percent GDP growth for the fourth quarter. This is a dramatically different picture than owners presented during the weak 2009-16 recovery,” said Bill Dunkelberg, chief economist of the NFIB.
A net 48 percent of small business owners who responded to the survey upon which the November was based said they expect the economy to improve, up 16 points from October.
The share of owners who said they consider now a good time to expand rose four points to 27 percent. At the same time, 26 percent of owners said they plan to increase capital spending over the next three to six months, down a point.
A net 34 percent of owners said they expect increased sales, up 13 points. At a net negative 12 percent, more owners reported lower earnings than higher earnings. That reading was down two points.
A net 7 percent of owners reported plans to increase inventories, up three points. At a net negative 2 percent, more owners said current inventories were too high rather than too low.
A net 24 percent of owners said they plan to increase staffing, up six points. Meanwhile, the share of owners reporting hard-to-fill job openings fell five points to 30 percent. “Job creation faded, but hiring plans soared, primarily in construction, manufacturing and professional services,” Dunkelberg said.
Duggan said small business owners pay close attention to what happens in Washington. “They continue to list taxes as their No. 1 problem, but they now have clear expectations that Congress and the president will address that problem,” she said. “As long as Congress and the president follow through on tax reform, 2018 is shaping up to be a great year for small business, workers and the economy.”