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The NFIB Small Business Optimism Index rose 3.4 points in December to 105.1, the second straight month above the 51-year average of 98 and the highest reading since October 2018.
Of the 10 components of the Optimism Index, seven have increased, two have decreased and one has remained unchanged. The uncertainty index fell 12 points in December to 86.
“Optimism on Main Street continues to grow with the improved economic outlook following the election,” said NFIB Chief Economist Bill Dunkelberg.
Dunkelberg added, “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.”
State-specific data is not available, but NFIB South Carolina State Director Ben Homeyer said, “There’s a real sense of hope among South Carolina small business owners when it comes to federal policy. Our members also hope that the General Assembly will pass laws to help them grow their businesses and create jobs.
Homeyer added, “An important step lawmakers can take is to address lawsuit abuse in the state. This would give Main Street businesses greater security, ensuring they are not one frivolous claim away from closure.”
Key findings of the national survey include:
* The net percentage of homeowners expecting the economy to improve rose 16 points from November to a net 52 percent (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 percent, 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 percent (seasonally adjusted), the highest reading since January 2020.
* A net 6 percent (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 percent reported compensation growth, down three points from November and the lowest reading since March 2021.
* A net 1 percent 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 operating 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 percent of all seasonally adjusted small business owners reported job openings they could not fill in December, down one point from November.
Of the 55 percent of employers hiring or trying to hire in December, 89 percent 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 percent reported spending on new equipment, 24 percent bought vehicles, and 16 percent improved or expanded facilities.
Eleven percent spent money on new appliances and furniture, and 7 percent 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 percent 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 percent (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 percent. Seasonally unadjusted, 13 percent reported increases in inventories and 14 percent reported decreases.
A net negative 1 percent (seasonally adjusted) of owners viewed current inventory stocks as “very low” in December, up one point from November.
A net 6 percent (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 percent.
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 percent reported lower average sales prices and 31 percent reported higher average prices.
Price increases were most frequent in finance (56 percent higher, 15 percent lower), retail trade 38 percent higher, 6 percent lower), construction (30 percent higher high, 9 percent lower) and transportation (30 percent higher, 9 percent lower). ) sectors.
Seasonally adjusted, a net increase in plan prices of 28 percent in December.
Seasonally adjusted, a net 29 percent reported compensation growth, down three points from November and the lowest reading since March 2021.
A seasonally adjusted net plan of 24 percent to increase compensation in the next three months, four points less than 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 percent.
Labor costs reported as the single most important issue for business owners were also unchanged from November at 11 percent, just two points below the peak reading of 13 percent reached in December 2021.
The frequency of reporting positive earnings trends was a net negative 26 percent (seasonally adjusted), unchanged from November.
Among owners who reported lower profits, 35 percent blamed weaker sales, 13 percent cited the usual seasonal change, 12 percent blamed rising materials costs and 11 percent cited labor costs.
For owners reporting higher profits, 51 percent credited sales volumes, 22 percent cited the usual seasonal variation and 7 percent 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 percent said they were not interested in a loan.
A net 4 percent reported that their most recent 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 randomly drawn from the NFIB membership.
