Optimism among small businesses in December reached its highest level since October 2006, the National Federation of Independent Business reported today, providing fresh evidence that Main Street is finally sharing in the economic recovery that has fueled major corporations and the stock market.
The Small Business Optimism Index gained 2.3 points to 100.4, taking the index back to its pre-recession average.
“The index showed some strength in November but most of the gains were confined to just two categories,” said NFIB Chief Economist Bill Dunkelberg. “The December index shows much broader strength led by a significant increase in sales expectations.”
Considerably more small business owners said now is a good time to expand, NFIB reported, with capital investments and hiring both on the rise. Some 60% reported capital outlays, with 42% reporting spending on new equipment, 23% acquiring new vehicles and 16% expanding or improving their facilities.
As for adding to their workforces, 54% told NFIB they were hiring or trying to hire, but 43% reported few or no qualified applicants for the open jobs. Some 25% reported job openings they could not fill. NFIB said the number of small businesses planning to create jobs was “consistent with the stronger GDP growth reported in the second half of the year and anticipates a ramp in private sector hiring.”
Asked about the most important problem they face, small businesses cited taxes first, followed by government regulations and red tape, then poor sales and the quality of labor.
Of the components tracked in the monthly survey, only expected business conditions in 6 months registered a decline. But NFIB pointed out that this had climbed 16 points in November, so the 1% decline “simply confirmed the very strong gain in November.”
“This could be a breakout for small business,” said Dunkelberg. “There’s no question that small business owners are feeling better about the economy. If they continue to feel that way, 2015 could be a very good year.”
