A leading measure of the country’s small-business optimism took its largest leap forward since 1980 to settle at a 12-year high. The National Federation of Independent Business Index of Small Business Optimism rose to 105.8 in December as expectations about the economy’s prospects improved dramatically in the aftermath of the presidential election.
The index jumped 7.4 points in December from 98.4. While seven of the 10 components increased, 73 percent of the monthly advance was due to more upbeat views about the outlook for sales and the economy, the Washington-based group said.
The share of business owners who say now is a good time to expand is three times the average of the current expansion, according to the NFIB’s data. More companies also said they plan to increase investment and keep hiring, which reflects optimism surrounding President-elect Donald Trump’s announced plans of spurring the economy through deregulation, tax reform and infrastructure spending.
“We haven’t seen numbers like this in a long time,” Juanita Duggan, president and chief executive of the NFIB, said in a statement. “Small business is ready for a breakout, and that can only mean very good things for the U.S. economy. Business owners are feeling better about taking risks and making investments.”
The NFIB report was based on a survey of 619 small-business owners through Dec. 28. Small companies represent more than 99 percent of all U.S employers, according to the U.S. Small Business Administration. A small business is defined as an independent enterprise with no more than 500 employees.
Fifty percent of respondents, the biggest share since March 2002, said they expect better business conditions in the next six months. That was 38 percentage points higher than in November. The net share of firms projecting higher sales jumped by 20 points to 31 percent. Twenty-nine percent say they will boost capital outlays within six months.