NFIB: Small Businesses Suggesting It Is a Good Time for Expansion at Record Levels

The National Federation of Independent Business (NFIB) said that the Small Business Optimism Index accelerated once again, up from 104.9 in December to 106.9 in January. That reading was not far from November’s figure, which was the highest since July 1983 (108.0).

Note that readings above 100 are consistent with strong growth among small business owners, and the robust data seen for much of the past year would suggest a healthy outlook overall in the economy. In that spirit, the percentage of respondents saying that the next three months would be a “good time to expand” rose from 27 percent to 32 percent, a new all-time high.

The labor market remained strong. The percent with positions that they are unable to fill right now increased from 31 percent to 34 percent, with the net percentage planning to add workers in the next three months unchanged at 20 percent. Along those lines, the top “single most important problem” was the quality of labor, illustrating the tightness of the job market for small businesses. This was followed by taxes (19 percent) and government regulations and red tape (16 percent).

In a similar way, capital expenditures activity remained promising, with the percent investing in capital unchanged at 61 percent. The percent planning to make a capital expenditure over the next three to six months increased from 27 percent to 29 percent, its highest rate since June (30 percent).

With that said, sales expectations eased somewhat in the latest survey. The net percentage reporting feeling that sales would be higher over the next three months dropped for the second straight month, down from 34 percent in November to 28 percent in December to 25 percent in January. Despite the lower figure, sales expectations remained robust, extending the 23.3 percent average seen in 2017 and up from an average of just 4.6 percent in 2016.

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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