Show-Me State Times

The NFIB Small Business Optimism Index experienced a significant rise in December, increasing by 3.4 points to reach 105.1. This marks the second consecutive month that the index has remained above the 51-year average of 98, achieving its highest level since October 2018. Among the ten components of the Optimism Index, seven showed improvement, two declined, and one remained unchanged. Additionally, the Uncertainty Index saw a decline of 12 points to 86.

"Optimism on Main Street continues to grow with the improved economic outlook following the election," stated NFIB Chief Economist Bill Dunkelberg. "Small business owners feel more certain and hopeful about the economic agenda of the new administration."

NFIB State Director Brad Jones emphasized the importance of legislative action to support small businesses: "With the legislative session underway here in Jeff City, lawmakers have an incredible opportunity to build on the optimism small business owners are feeling."

Key findings from the survey indicate that expectations for economic improvement have risen significantly, with a net 52% of owners anticipating better conditions—an increase of 16 points from November and the highest since late 1983. The percentage of owners considering it a good time to expand their business rose six points to 20%, while expectations for higher real sales volumes increased by eight points to a net 22%.

Inventory investment plans among owners also grew, with a net 6% planning such investments in coming months—the highest reading since December 2021. However, reports of raising compensation decreased slightly, reaching their lowest point since March 2021.

Inflation remains a concern for many small business owners; it was identified as their most significant problem by 20% of respondents—unchanged from November. In terms of employment challenges, a seasonally adjusted figure showed that 35% reported job openings they could not fill.

Capital outlays were reported by over half (56%) of small business owners in recent months, reflecting spending on equipment and other assets. Looking ahead, planned capital outlays saw a slight decrease.

Profit trends remained stable compared to November's data, with weaker sales cited as a primary factor for those reporting lower profits.

Finally, credit access issues appeared limited among respondents; only two percent reported unmet borrowing needs while financing concerns were minimal.

The NFIB Research Center has been collecting data through quarterly surveys since late 1973 and monthly surveys since 1986. The current survey reflects responses collected in December.