The NFIB Small Business Optimism Index increased by 3.4 points in December, reaching 105.1. This marks the second month in a row that the index has exceeded the 51-year average of 98, reaching its highest level since October 2018.
Among the ten components of the index, seven showed improvement, while two decreased and one remained unchanged. Additionally, the Uncertainty Index dropped by 12 points in December, coming in at 86.
According to Bill Dunkelberg, the Chief Economist at NFIB, “Optimism on Main Street continues to grow due to a more positive economic outlook since the election.” He mentioned that small business owners are feeling more confident about the economic goals of the new administration. They expect better economic growth, lower inflation, and favorable conditions for business in the upcoming year.
While national data is available, Ben Homeyer, the NFIB South Carolina State Director, expressed that small business owners in South Carolina are hopeful about federal policy changes. He noted a desire for local lawmakers to pass supportive legislation that could help businesses grow and create jobs. One suggestion he made was to tackle lawsuit abuse, ensuring that small businesses have more protection against frivolous claims that could threaten their existence.
Here are some key findings from the national survey:
- The percentage of owners expecting economic improvement rose by 16 points to a net 52%, the highest since late 1983.
- Twenty percent of small business owners think it’s a good time to expand, a six-point increase, marking the highest level since February 2020.
- Owners anticipating higher sales volumes surged by eight points to a net 22%, the best since January 2020.
- Six percent of owners plan to invest in inventory soon, up five points from November, the highest since December 2021.
- Twenty-nine percent reported increasing compensation, though this figure has decreased slightly over the past few months.
- Inflation remains a significant concern, with 20% of owners pointing to it as their biggest challenge.
The NFIB also reported job openings, with 35% of small business owners unable to fill positions in December. Among those hiring or trying to hire, 89% noted a lack of qualified applicants.
In terms of capital spending, 56% of owners reported outlays in the last six months, primarily for new equipment and vehicles. Looking ahead, 27% plan to make further investments in the coming months, highlighting a cautious but optimistic approach to business growth.
When discussing pricing, a net 24% of owners plan to raise their selling prices, with most increases occurring in sectors like finance and retail. Concerns about labor quality and costs remain high, with both issues being common points of reflection for many business owners.
The NFIB Research Center has been gathering data on Small Business Economic Trends since 1973, providing valuable insights into the health and outlook of small businesses across the nation.
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