NFIB: Small business optimism improved following Trump’s election

Small business owner optimism reached a six-year high following November’s election, according to December’s National Federation of Independent Business small business survey.  

The index for small business optimism increased 3.4 points last month to 105.1, its second straight month of being higher than the 51-year average of 98 and its highest reading since October 2018. The index for uncertainty fell a dozen points to 86, as business owners became more confident about economic policies following Trump’s victory. According to the NFIB, small business optimism also increased following Trump’s upset 2016 presidential win over Democrat Hillary Clinton. 

Inflation remains a pressing challenge as 20 percent of owners cited it as the No. 1 operating problem, edging out the 19 percent who cited labor quality as the top issue. Thirty-one percent experienced higher average prices, while only 11 percent had lower average selling prices. 

Eleven percent cited labor costs as their most important problem. Thirty-five percent of owners had job openings they could not fill in the current period, down one point from November. Twenty-nine percent had openings for skilled workers, and 13 percent had openings for unskilled labor. 

A net 29 percent of small businesses raised compensation, down three points from November and the lowest reading since in nearly four years. A seasonally adjusted net 24 percent expect to increase compensation in the next three months, down four points from November. A seasonally-adjusted net 19 percent of owners expected to create jobs in the next three months in December, up one point from the previous month.  

Fifty-six percent of small businesses had capital outlays in the last six months, up two points from November. Of those, 37 percent spent on new equipment, 24 percent bought vehicles and 16 percent improved or expanded facilities.     

A net negative 13 percent of owners in December had higher nominal sales in the past three months, which was unchanged from the previous month. A net 22 percent of owners expected higher real sales volumes last month, up eight points from November and its highest reading in nearly five years. 

Other December report findings included:

  • The frequency of positive profit trend reports was a net negative 26 percent, unchanged from November. Of those seeing less profit, 35 percent cited weaker sales. Those seeing more profit cited sales volumes and typical seasonal changes.