The National
Federation of Independent Business (NFIB) announced on Tuesday its Small
Business Optimism Index jumped by 1.3 points to 91.9 in December 2023,
following a 0.1-point slip in the previous month. This marked the first increase
in the indicator in five months, lifting it to the highest level since July
2023 (91.9). Nonetheless, the index remained below the 50-year average of 98.0
for the 24th month in a row. The last time the Optimism Index was at or above
the average was December 2021.
Economists had forecast
the index to advance to 90.7 in the final month of 2023.
According to
the report, the December gain in the headline gauge was due to increases in 5
components, driven by a measure of small business owners reporting positive profit trends (+7
points) and a measure of small business owners expecting the economy to improve
(+6 points). These rises, however, were partly offset by declines in 3 other
indicators, led by a measure of owners viewing current inventory stocks as “too
low” in December (-5 points). Meanwhile, two components were unchanged.
Commenting on
the latest data, Bill Dunkelberg, NFIB Chief Economist, noted that small
business owners remained very pessimistic about economic prospects in 2023. “Inflation
and labour quality have consistently been a tough complication for small
business owners, and they are not convinced that it will get better in 2024,”
he added.