In a notable economic development, the National Federation of Independent (LON:IOG) Business (NFIB) Small Business Optimism Index experienced an eight-point increase in November 2024, reaching 101.7. This surge marked the first time in 34 months that the index surpassed the 50-year average of 98, achieving its highest level since June 2021. The NFIB report, based on data collected in November, revealed a significant uplift in sentiment among small business owners, with nine out of the ten index components showing improvement, and none declining.
Bill Dunkelberg, NFIB Chief Economist, attributed this rise in optimism to the outcomes of recent elections, which signaled potential changes in economic policy. Dunkelberg noted, "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."
Key findings from the November report include:
- A significant 41-point jump in the net percentage of owners expecting the economy to improve, reaching a net 36%, the highest since June 2020.
- The net percentage of owners who believe it is a good time to expand their businesses increased by eight points to a net 14%, the highest since June 2021.
- There was an 18-point rise in the net percentage of owners expecting higher real sales volumes, reaching a net 14%, the highest since February 2020.
- The net percentage of owners paying a higher rate on the most recent loan remained at 5%, consistent with October's lowest level since January 2022.
- Plans for capital outlays in the next six months rose to 28%, a six-point increase from October and the highest since January 2022.
- The frequency of reports of positive profit trends improved to a net negative 26%, the highest reading this year.
- Inflation as the single most important problem decreased to 20%, overtaking labor quality by one point.
- Thirty-six percent of owners reported job openings they could not fill, a one-point increase from October.
The report also highlighted that 54% of owners made capital outlays in the past six months, with 39% spending on new equipment and 28% planning further capital outlays in the next six months. Additionally, a net negative 13% of owners reported higher nominal sales in the past three months, which is an improvement from October.
Price increases were most frequent in the wholesale, finance, retail, and services sectors. A net 32% of owners reported raising compensation, with a net 28% planning to raise compensation in the next three months, marking the highest reading of the year.
Labor quality as the most important problem decreased slightly to 19%, while labor costs rose to 11%. Among owners reporting lower profits, sales were the primary concern, while those with higher profits largely credited increased sales volumes.
Only 4% of owners indicated that their borrowing needs were not met, and 5% reported financing as their top business problem.
The NFIB has been tracking small business economic trends through regular surveys since 1973, with this latest report being released following the survey conducted in November 2024.
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