Small-Business Optimism Rises on Strong Sales Outlook
Higher Sales Expectations Drive Gains in NFIB Sentiment Index
Key Takeaways:
- The NFIB said its small business optimism index rose 0.8 point to 99 in November, driven mainly by a sharp improvement in sales expectations.
- A net 15% of owners anticipated higher sales and a net 19% planned new hiring, but inflation pressures increased as 34% reported raising prices.
- Despite stronger sales and hiring plans, expectations for U.S. economic improvement fell to a seven-month low and uncertainty remained elevated.
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Sentiment among U.S. small businesses increased in November, largely due to a surge in optimism about the sales outlook.
The National Federation of Independent Business rose 0.8 point to a three-month high of 99, according to figures released Dec. 9. Six of the 10 components that make up the gauge increased, while three decreased. One was unchanged.
A 9-point improvement in sales expectations was the biggest contributor to the overall increase in the optimism index, NFIB said. A net 15% of owners anticipate higher sales volumes in the next three months, the largest share since the start of the year.
Greater sales expectations helped bolster hiring intentions. A net 19% of small companies said they plan to create new jobs in the next three months. That was up 4 points from October and the largest share this year.
Increased optimism about sales prospects surfaced despite mounting inflationary pressures. A net 34% said they raised their prices compared with three months ago — the largest share since March 2023 and an increase of 13 percentage points from October.
(Bloomberg)
Inflation concerns ranked as the second-biggest problem for small firms behind labor quality.
In addition to sales expectations and hiring intentions, the overall index was boosted by a slight improvement in plans to increase inventories and earnings trends.
Despite optimism for sales and earnings, business owners were less upbeat about the U.S. economic outlook. A net 15% of small-business owners say they expect the economy to improve in coming months, a seven-month low. The uncertainty index also remained elevated.
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