NFIB: Small Business Owners Remained Very Upbeat in January

The National Federation of Independent Business (NFIB) said that sentiment among small business owners remained at a 12-year high in January. The Small Business Optimism Index edged up from 105.8 in December to 105.9 in January, with both at levels not seen since December 2004. Respondents have responded quite positively in the aftermath of the election, hoping that the new Administration will bring about needed changes on the tax and regulatory front. Along those lines, the percentage of respondents suggesting that the next three months would be a “good time to expand” has risen from 11 percent in November to 23 percent in December to 25 percent in January, its fastest pace since the Great Recession. In addition, the percentage expecting sales to increase over the next three months remained elevated, but eased in this report from 31 percent in December, its largest level since October 2005, to 29 percent in January.

While actual employment changes remained soft (but positive) in January, the net percentage planning to add workers in the next three months edged up from 16 percent to 18 percent, a post-recessionary high. On the investment front, 59 percent of small business owners said that they had made a capital expenditure in the last six months, down from the three-year high of 63 percent in the prior report. Similarly, capital spending plans for the next three to six months dipped from 29 percent to 27 percent.

The top “single most important problem” was taxes (21 percent), highlighting the need for comprehensive tax reform. Government regulations (19 percent), the quality of labor (15 percent) and poor sales (10 percent) also topped the list.

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM) and the Director of the Center for Manufacturing Research for The Manufacturing Institute, where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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