NFIB Small Business Optimism Index Reaches Highest Level Since June 2021

On Tuesday, the National Federation of Independent Business (NFIB), one of the largest small business associations in the US, released its Small Business Optimism Index (SBOI) for November. The November SBOI increased 8.0 points to a reading of 101.7, after remaining below the 50-year average of 98 for 34 months. This is also the highest reading since June 2021.

Of the 10 Optimism Index components, nine increased, none decreased, and one was unchanged. The Uncertainty Index declined 12 points to a reading of 98, after reaching a record of 110 in October.

Seasonally adjusted, 36% of all small business owners reported job openings they could not fill in November, up 1 point from October. Of the 55% of owners hiring or trying to hire in November, 87% reported few or no qualified applicants for the positions they were trying to fill.

Other highlights of the SBOI include the following:

• 27% of owners reported that inflation was their single most important problem in operating their business (higher input and labor costs), down 3 points from October and surpassing labor quality as the top issue by 1 point.
• The net percent of owners expecting the economy to improve rose 41 points from October to a net 36%, the highest since June 2020. This component had the greatest impact on the overall increase in the Optimism Index.
• The net percent of small business owners believing it is a good time to expand their business rose 8 points to a net 14%. This is the highest reading since June 2021.
• The net percent of owners expecting higher real sales volumes rose 18 points to a net 14% (seasonally adjusted), the highest reading since February 2020.
• The frequency of reports of positive profit trends was a net negative 26% (seasonally adjusted), up 7 points from October and the highest reading of this year.

In comments accompanying the report, NFIB Chief Economist Bill Dunkelberg said:

“The election results signal a major shift in economic policy, leading to a surge in optimism among small business owners. Main Street also became more certain about future business conditions following the election, breaking a nearly three-year streak of record high uncertainty. 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.”