Upbeat expansion plans bolster optimism index

A monthly measure of optimism among small business owners has rebounded with a record proportion of owners indicating they believe now is a good time to expand.

“Main Street is roaring. Small business owners are not only reporting better profits, but they’re also ready to grow and expand,” said Juanita Duggan, president and chief executive officer of the National Federation of Independent Business. “The record level of enthusiasm for expansion follows a year of record-breaking optimism among small businesses.”

The NFIB reported its Small Business Optimism Index rose two points to 106.9 in January. That’s about a point less than the peak reading of 108 for the index recorded in July 1983. The January reading follows a year in which the average monthly reading was 104.8, the highest level ever.

“The historically high index readings over the last year tell us small business owners have never been more positive about the economy,” said Bill Dunkelberg, chief economist for the NFIB. “This is in large response to the new management in Washington tackling the biggest concerns of small business owners — high taxes and regulations.”

The NFIB bases the index on the results of monthly surveys of members of the small business advocacy group, most of them small business owners. For January, six of 10 components of the index advanced, while two retreated and two remained unchanged.

The proportion of small business owners responding to the survey upon which the January index was based who said they expect the economy to improve rose four points to a net 41 percent.

The share of owners who said they consider now a good time to expand rose five points to 32 percent, the highest level in the history of the index, which began in 1973. A net 29 percent of owners reported plans to make capital outlays, up two points.

At a net negative 4 percent, more owners reported lower earnings than higher earnings. Nonetheless, the reading jumped 11 points to its highest level since 1988.

A net 20 percent of owners said they plan to increase staffing, unchanged. A net 34 percent of owners reported hard-to-fill job openings, up three points. Finding qualified workers topped taxes and regulations as the top concerns for owners.

A net 25 percent of owners said they expect increased sales, down three points.

A net 3 percent of owners reported plans to increase inventories, up four points. Still, more owners reported existing  inventories were too high rather than two low, pulling the reading down three points to a net negative 5 percent.