Small Business Optimism Jumps to 3-Year High: NFIB

The NFIB Small Business Optimism Index rose by eight points in November to 101.7, after 34 months of remaining below the 50-year average of 98. This is the highest reading since June 2021 and the biggest monthly jump since July 1980.

Of the 10 Optimism Index components, nine increased, none decreased, and one was unchanged. Following last month’s record high of 110, the Uncertainty Index declined 12 points in November to 98.

“The election results signal a major shift in economic policy, leading to a surge in optimism among small business owners,” said NFIB Chief Economist Bill Dunkelberg. “Owners are particularly hopeful for tax and regulation policies that favor strong economic growth as well as relief from inflationary pressures. In addition, small business owners are eager to expand their operations.”

The component that had the greatest impact on the overall increase in the Optimism Index was the net percentage of owners expecting the economy to improve, which rose 41 points to a net 36%, the highest since June 2020.

A net 14% of small business owners think this is a good time to expand, an eight-point increase and the highest reading since June 2021. The number of owners who anticipate higher real sales volumes climbed 18 points to a net 14% (seasonally adjusted), the highest reading since February 2020.

In addition, 20% of owners reported that inflation was their single most important problem in operating their business given higher input and labor costs, down three points from October and surpassing labor quality as the top issue by one point. Over one-third (36%) of all owners reported job openings they could not fill in the current period, up one point from October.