Small business owners are feeling more optimistic than they have since 2007 and expect the economy and their sales to improve over the next six months, a survey shows.
The monthly survey by the National Federation of Independent Business said the December optimism index rose to 98.1, up to two points from November and just a tad lower than its historical average before the Great Recession.
“This performance will have to be consolidated by several more positive readings before owners are confident to hire more employees and expand their business,’’ said Bill Dunkelberg, chief economist for the NFIB. “But it’s a good sign that comes at a good time for small business.’’
Also encouraging is what business owners consider to be their biggest problem: taxes. During the economic crisis, poor sales were the chief concern as people lost jobs and reduced their spending. Today, poor sales trail significantly behind tax woes, followed by government regulations and red tape.
Almost equal to sales is the problem of finding quality labor to fill jobs. Those were the top complaints among companies during the 1990s boom, suggesting to some economists that the country is on the right track for growth.
NFIB officials say the optimism could be attributed to the November election in which Republicans won the majority in the Senate and strengthened their lead in the House. The survey showed that people expect business conditions to improve by 16% during the next six months and expect sales to increase by 5%.
Furthermore, the percentage of business owners who said no when asked if now was a good time to substantially expand their businesses, dropped 5 percentage points to 53.
The survey also pointed to a tightening job market. More than half (53%) of business owners said they were hiring or trying to hire, while 45% said they had few or no qualified applicants for the positions.
Fifteen percent of respondents said they use temporary workers, a 1% increase. Nearly one-quarter of owners said they had at least one job opening they couldn’t fill, which was unchanged from October.
Despite the sunny outlook, the NFIB cautions that future expectations for growth might not be as rosy. In the coming months, healthcare issues could affect small business owners and create additional out of pocket expenses for consumers facing higher deductibles.
The NFIB Research Foundation has been conducting the monthly surveys of its members since 1986. The December survey was done last month based on 608 responses from a sampling of 3,938 small business owner members.
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