November 2017 Small Business Optimism

Small business optimism is at multi-decade high according to the National Federation of Independent Business (NFIB).  This measure of enthusiasm has not reached this level in over 34 years, and it has only reached a similar reading one other time in the survey’s 44-year history.  The optimism index reached 107 during November 2017, a gain of 3.7 points. 

Eight of the ten components were higher in the period.  Expectations for an improving economy led the monthly jump.  A growing number of proprietors also anticipate better retail sales as this category was the second largest contributor.  Additional owners are making plans to increases their payrolls and believe now is a good time to expand.  Both inventory measures improved as well; a growing number of firms will continue stocking their shelves even as more businesses believe they are coming closer to an appropriate level of supplies.  Finally, earnings trends improved moderately, and credit expectations were marginally higher.  Only the jobs openings component as well as plans to make capital outlays fell in the period, but both declines were relatively minor. 

Exuberant is an appropriate way to describe America’s small business sector.  The NFIB suggests a better gross domestic product in the coming future, and it is not alone.  Other survey indicators point to an enthusiastic consumer base well.  Furthermore, hard-data indicators like retail sales and personal consumption expenditures support the narrative that America’s current expansion is poised to continue.