NFIB Small Business Optimism Index Improves Modestly in December, but Owners’ Concerns Persist

The National Federation of Independent Business (NFIB), one of the largest small business associations in the US, reported on Tuesday (1-9-24) that its NFIB Small Business Optimism Index (SBOI) increased 1.3 points to a reading of 91.9 in December. Nonetheless, this marks the 24th consecutive month that the SBOI has been below the 49-year average reading of 98. The last time the Index was at or above the average was December 2021.

In December, 23% of small business owners reported that inflation was still their single most important business problem—up one point from last month and replacing labor quality as the top concern.

Other highlights of the SBOI include the following:

• Small business owners expecting better business conditions over the next six months increased 6 points from November to a net negative 36% seasonally adjusted. This is a 25-percentage point improvement from last June’s reading of a net negative 61%.
• Seasonally adjusted, a net 29% of owners plan to raise compensation in the next three months, down one point from November.
• The net percentage of owners raising average selling prices was unchanged from November, holding steady at a net 25%, seasonally adjusted.
• The net percentage of owners who expect real sales to be higher increased 4 points from November to a net negative 4%, seasonally adjusted. This marks the highest reading since January 2022.

Commenting on the results of the December SBOI, NFIB Chief Economist Bill Dunkelberg said:

“Small business owners remain very pessimistic about economic prospects this year. Inflation and labor quality have consistently been a tough complication for small business owners, and they are not convinced that it will get better in 2024.”