The National
Federation of Independent Business (NFIB) reported on Tuesday its Small
Business Optimism Index surged by 8 points to 101.7 in November, following a 2.2-point
jump in the previous month. This was the highest reading since June 2021 (102.5)
and marked the first time in 35 months that the indicator was above the 50-year
average of 98.0.
Economists had predicted
the index to increase to 94.2 in November.
According
to the report, the November climb in the headline gauge was due to advances in nine
components, led by a measure of small business owners expecting the improvement
in the economy (+48 points) and a measure of small business owners expecting
real sales to be higher (+14 points). Meanwhile, a measure of small business owners viewing current
inventory stocks as “too low” was unchanged.
Commenting on
the latest data, Bill Dunkelberg, NFIB Chief Economist, noted that the U.S. 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,” he added. According to Dunkelberg, owners are
particularly hopeful for tax and regulation policies that favour strong
economic growth, as well as, relief from inflationary pressures. In addition,
small business owners are eager to expand their operations.