Small Business Optimism Index slips

William Dunkelberg

A monthly measure of optimism among small business owners has slipped, but still finished 2019 at an historically high level that bodes well for 2020.

“December marked the end of another banner year for the small business economy as owners took full advantage of strong consumer spending and federal tax and regulatory relief. 2020 is starting out with a solid foundation for continued growth,” said William Dunkelberg, chief economist of the National Federation of Independent Business.

The NFIB reported its Small Business Optimism Index fell two points to 102.7 in December.

The NFIB bases the index on the results of monthly surveys of members of the small business advocacy organization, most of them small business owners.

Proceedings to impeach President Donald Trump have had little effect so far on small business owners, Dunkelberg said. That’s similar to what occurred with efforts to impeach President Bill Clinton more than two decades ago.

“What really matters to small business owners are issues directly impacting their bottom lines,” Dunkelberg said. “Currently, their biggest problem is finding qualified labor, surpassing taxes or regulations.”

For December, six of 10 components of the index retreated, two advanced and two remained unchanged.

The proportion of small business owners responding to the survey upon which the December index was based who expect the economy to improve rose three points to a net 16 percent.

A net 16 percent of owners expect higher sales, also up three points from November.

A net 28 percent of owners reported plans for capital outlays, down two points. A net 25 percent of owners said they consider now a good time to expand, down four points.

A net 19 percent of owners reported plans to increase hiring, down two points. A net 33 percent of owners reported hard-to-fill job openings, down five points. Still, 23 percent of owners cited finding qualified workers as their single most important business problem

A net 3 percent of owners said they plan to increase inventories, unchanged from a month ago. At a net negative 4 percent, more owners reported current inventories too high than too low.

The proportion of owners reporting higher earnings fell 10 points. At a net negative 8 percent, more owners reported lower earnings than higher earnings.