Posted on December 10, 2024
On Tuesday, the National Federation of Independent Business (NFIB), one of the largest small business associations in the US, released its November Small Business Optimism Index (SBOI). The November SBOI rose 8.0 points to a reading of 101.7, after remaining below the 50-year average of 98 for 34 months. This is also the highest reading since June 2021.
Of the 10 components of the Optimism Index, nine increased, none decreased and one remained unchanged. The uncertainty index fell 12 points to a reading of 98, after reaching a record of 110 in October.
Seasonally adjusted, 36% of all small business owners reported open positions they were unable to fill in November, up 1 point from October. Of the 55% of owners who hired or attempted to hire in November, 87% reported that there were few or no qualified applicants for the positions they were trying to fill.
Other SBOI highlights include:
- 27% of owners reported that inflation was their most important problem in the operation of their business (higher costs of inputs and labor), 3 points less than in October and surpassing the quality of labor as the main problem in 1 point.
- The net percentage of homeowners who expect the economy to improve increased 41 points from October to a net 36%, the highest since June 2020. This component had the largest impact on the overall increase in the optimism index.
- The net percentage of small business owners who believe it is a good time to expand their business increased 8 points to a net 14%. This is the highest reading since June 2021.
- The net percentage of owners expecting higher actual sales volumes increased 18 points to a net 14% (seasonally adjusted), the highest reading since February 2020.
- The frequency of reporting positive earnings trends was a net negative 26% (seasonally adjusted), up 7 points from October and the highest reading this year.
In comments accompanying the report, NFIB Chief Economist Bill Dunkelberg said:
“The election results signal a major shift in economic policy, leading to increased optimism among small business owners. Main Street also became more certain about future business conditions after the election, breaking a nearly three-year streak of record uncertainty. Owners are particularly hopeful for fiscal and regulatory policies that favor strong economic growth as well as an alleviation of inflationary pressures. Additionally, small business owners are eager to expand their operations.”
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