Macro Flash Report

Small Business Optimism

 

Takeaway: December data from the NFIB (National Federation of Independent Businesses) Small Business Survey continues to impress with the highest Optimism reading since October 2018, another encouraging signal from the “soft data” going into the new year.

NFIB Small Business Optimism & Uncertainty Index

In December, the NFIB Small Business Optimism Index soared to 105.1, coming in above the 50-year average of 98 for the second consecutive month and reaching the highest level since October 2018. This follows a 101.7 reading in November and surpasses the market expected print of 101.3. The Uncertainty Index continued to ease, declining by 12 points to 86 as election results are in the rearview mirror and we turn the page to 2025.

Of the 10 components, 7 increased, 2 decreased, and 1 was unchanged. Key findings include:

  • The net percent of small business owners expecting the economy to improve jumped to 52% (+16 points), the highest since Q4 1983. Additionally, owners believing it is a good time to expand their business rose to 20% (+6 points), the highest since February 2020.
  • Owners expecting higher real sales volumes increased to 22% (+8 points), the highest since January 2020.
  • 6% (+5 points) of owners plan inventory investment in the coming months, the highest since December 2021.
  • 29% (-3 points) reported raising compensation, the lowest since March 2021.
  • Owners paying a higher rate on their most recent loan fell to 1% (-4 points), the lowest since September 2021.
  • 20% (unchanged) reported that inflation was their single most important issue in operating their business, leading labor quality as the top problem by 1 point.