of NFIB Small Business Optimism Index rose 3.4 points in December to 105.1, the second month in a row above the 51-year average of 98 and the highest reading since October 2018. Of the 10 components of the Optimism Index, seven increased, two decreased and one remained unchanged unchanged. The uncertainty index fell 12 points in December to 86.
“Optimism on Main Street continues to grow with the improved economic outlook after the election,” he said NFIB Chief Economist Bill Dunkelberg. “Small business owners feel more confident and hopeful about the new administration’s economic agenda. Expectations for economic growth, lower inflation and positive business conditions have increased in anticipation of pro-business policies and legislation in the new year.”
Wisconsin’s manufacturing and retail sectors are showing renewed confidence after this report. The fact that 37% of businesses are investing in new equipment matches what we’re seeing in our state’s small business community,” said Bill G. Smith, NFIB Wisconsin State Director. “Wisconsin’s Main Street is looking to grow, and state lawmakers must adopt pro-small business policies if they want this trend to continue.”
Key findings include:
- The net percentage of owners expecting the economy to improve rose 16 points from November to 52% net (seasonally adjusted), the highest since the fourth quarter of 1983.
- The percentage of small business owners who believe it’s a good time to expand their business rose six points to 20%, seasonally adjusted. This is the highest reading since February 2020.
- The net percentage of owners expecting higher real sales volumes rose eight points to a net 22% (seasonally adjusted), the highest reading since January 2020.
- A net 6% (seasonally adjusted) of landlords plan investments in inventory in the coming months, up five points from November and the highest reading since December 2021.
- Seasonally adjusted, a net 29% reported compensation growth, down three points from November and the lowest reading since March 2021.
- A net 1% of homeowners reported paying a higher rate on their most recent loan, down four points from November and the lowest reading since September 2021.
- Twenty percent of owners reported that inflation was their single most important problem in running their business (higher input and labor costs), unchanged from November, and quality of work as the top one-point issue.
As reported in the NFIB’s monthly jobs report, 35% of all seasonally adjusted small business owners reported job openings they could not fill in December, down one point from November. Of the 55% of employers hiring or trying to hire in December, 89% reported few or no qualified applicants for the positions they were trying to fill.
Fifty-six percent of homeowners reported capital expenditures in the past six months, up two points from November. Of those who do spend, 37% reported spending on new equipment, 24% purchased vehicles, and 16% improved or expanded facilities. Eleven percent spent money on new appliances and furniture, and 7% bought new buildings or land for expansion. Twenty-seven percent (seasonally adjusted) plan capital spending in the next six months, down one point from November’s highest reading since January 2022.
A net negative 13% of all owners (seasonally adjusted) reported higher nominal sales in the past three months, unchanged from November. The net percentage of owners expecting higher real sales volumes rose eight points to a net 22% (seasonally adjusted), the highest reading since January 2020.
The net percentage of owners reporting inventory gains rose seven points to a seasonally adjusted net 0%. Not seasonally adjusted, 13% reported increases in inventories and 14% reported decreases.
A net negative 1% (seasonally adjusted) of owners saw current inventory stocks as “very low” in December, up one point from November. A net 6% (seasonally adjusted) of landlords plan investments in inventory in the coming months, up five points from November and the highest reading since December 2021.
The net percentage of owners who increased their average sales prices was unchanged from November at a seasonally adjusted net 24%. Twenty percent of owners reported that inflation was their single most important problem in running their business, unchanged from November, and quality of work as the top one-point issue. Unadjusted, 11% reported lower average sales prices and 31% reported higher average prices.
Price increases were most frequent in finance (56% higher, 15% lower), retail 38% higher, 6% lower), construction (30% higher, 9% lower low) and transport (30% higher, 9% lower). ) sectors. Seasonally adjusted, a net price increase plan of 28% in December.
Seasonally adjusted, a net 29% reported compensation increases, down three points from November and the lowest reading since March 2021. A seasonally adjusted net of 24% plan to increase compensation in the next three months, four points below from November.
The percentage of small business owners who report quality of work as the single most important business problem remained unchanged from November at 19%. Labor costs reported as the single most important issue for business owners were also unchanged from November at 11%, just two points below the peak reading of 13% reached in December 2021.
The frequency of reporting positive earnings trends was a net negative 26% (seasonally adjusted), unchanged from November. Among owners who reported lower profits, 35% blamed weaker sales, 13% cited the usual seasonal variation, 12% blamed rising materials costs and 11% cited labor costs. For owners reporting higher profits, 51% credited sales volumes, 22% cited the usual seasonal variation, and 7% cited higher sales prices.
Two percent of owners reported that all of their loan needs were not met. Twenty-four percent reported all credit needs met and 65% said they were not interested in a loan. A net 4% reported that their last loan was more difficult to obtain than in previous attempts. Four percent of owners reported that financing was their business’ top problem in December, down one point from November.
The NFIB Research Center has collected data on Small Business Economic Trends with quarterly surveys since the fourth quarter of 1973 and monthly surveys since 1986. Survey respondents are drawn randomly from the NFIB membership. The report is published on the second Tuesday of each month. This survey was conducted in December 2024.
