The National
Federation of Independent Business (NFIB) announced on Tuesday its Small
Business Optimism Index increased by 3.4 points to 105.1 in December 2024,
following an 8.0-point surge in the previous month. This represented the
highest reading since October 2018 (107.4) and marked the second consecutive
month that the indicator was above the 51-year average of 98.0.
Economists had forecast
the index to slip to 100.8 in December.
According
to the report, the December gain in the headline gauge was due to advances in seven
components, led by a measure of small business owners expecting the improvement
in the economy (+16 points) and a measure of small business owners expecting
real sales to be higher (+8 points). In the meantime, two components - a measure of small
business owners planning capital outlays in the next few months (-1 point) and a
measure of small business owners reporting they have job openings that they
could not fill in the current period (-1 point) - decreased, while a measure of
small business owners reporting positive profit trends was unchanged.
Commenting on
the latest data, Bill Dunkelberg, NFIB Chief Economist, noted that optimism on
Main Street continues to grow with the improved economic outlook following the
election. “Small business owners feel more certain and hopeful about the
economic agenda of the new administration,” he added. “Expectations for
economic growth, lower inflation, and positive business conditions have
increased in anticipation of pro-business policies and legislation in the new
year.”