Global| Jan 11 2022U.S. Small Business Optimism Index Edges Up in December
by:Tom Moeller
|in:Economy in Brief
Summary
- Optimism reading, however, remains below June level.
- Component increases are modest.
- Pricing power slips.
The Small Business Optimism Index of 98.9 in December remained little changed from 98.4 in November as small business owners remained concerned about inflation in prices and labor costs. Seven of the index's ten components rose modestly while three eased. The NFIB Uncertainty Index rose to the highest level in three months.
The net balance of respondents expecting the economy to improve over the next six months improved slightly to -35% in December, the highest level in three months. The figure remained well below its June 2020 peak of 39%. Expected higher real sales rose minimally. Plans to expand the business edged up to 11% from 10% but remained below the June 2021 high of 15%. An increased 29% of firms expected to make capital outlays compared to a recent low of 20% in March of last year.
Employment readings improved slightly. The net balance of firms planning to raise employment edged up to 28% in December from 25% in November, placing it at the highest level since August. Finding qualified candidates to fill job openings became a little harder. The index measuring few or no qualified applicants rose to 57% from 56%, though it remained below the September high of 62%. The percentage of firms raising worker compensation surged to a record 48% and the percentage planning to raise compensation was steady at the record 32%.
Price inflation pressures continued to intensify with a net 57% percent of respondents raising average selling prices, down slightly from November's record 59%. It was increased from 16% in December 2020. The percentage planning to raise prices fell to 49% from November's record 54%, but compared to 22% in December 2020.
Twenty-five percent of respondents cited the quality of labor as their most important problem, down from the record 29% in November, while a record 13% cited labor costs. Inflation surged to 22% of respondents reporting it as the single most important problem, up from two percent in December 2020. Government requirements where cited by a steady 10% of respondents as the single most important problem, down from a May 2013 high of 23%.
Roughly 24 million small businesses exist in the U.S. and they create 80% of all new jobs. The typical NFIB member employs 10 people and reports gross sales of about $500,000 a year. The NFIB figures can be found in Haver's SURVEYS database.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
More Economy in Brief
