In November, U.S. small business confidence soared to its highest level in over three years, as the uncertainty surrounding future economic conditions diminished following the election of Donald Trump. Business owners are now optimistic about potential pro-business tax reforms and regulatory policies, according to a survey released by the National Federation of Independent Business (NFIB) on Tuesday.
The NFIB Small Business Optimism Index climbed eight points to 101.7 in November, significantly surpassing economists' forecast of 94.6. This marks the highest score since June 2021, effectively ending a 34-month period during which the index remained below the 50-year average of 98. Of the ten components that make up the headline index, nine increased, while one remained unchanged.
The Uncertainty Index fell by 12 points to 98 from a record high of 110 in October. NFIB Chief Economist Bill Dunkelberg noted, "The election results signal a major shift in economic policy, leading to a surge in optimism among small business owners." He added, "Following the election, Main Street gained more confidence in future business conditions, breaking nearly three years of record high uncertainty."
Small business owners have high hopes for tax and regulatory policy adjustments that could foster robust economic growth and alleviate inflationary pressures, Dunkelberg remarked. There is also an optimistic outlook for business expansion.
Among the index components, the net percentage of owners anticipating an improved economy jumped 41 points from October, reaching a net 36 percent, the highest level since June 2020, significantly contributing to the rise in the Optimism Index.
The survey also revealed that a net 14 percent of small businesses viewed it as an opportune time for expansion, the highest reading since June 2021. Additionally, the net percentage of owners expecting higher real sales volumes rose by 18 points to a net 14 percent, marking the most optimistic reading since February 2020.
The proportion of respondents identifying inflation as their primary concern decreased by three points to 20 percent, still surpassing labor quality concerns by one point. The NFIB jobs report indicated that 36 percent of small business owners, seasonally adjusted, reported unfilled job openings in November, a slight increase from October.
Furthermore, of the 55 percent of owners attempting to hire in November, 87 percent experienced difficulty finding qualified candidates for their vacancies.
