U.S. Small-Business Owners Confidence Rose Slightly in December — NFIB

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by Javier Fontdegloria

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Confidence among US small business owners rose in December as the outlook for the economy improved and firms made plans to hire more and invest, according to a survey by the National Federation of Independent Business released Tuesday.

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The NFIB Small Business Optimism Index rose from 98.4 in November to 98.9 in December, slightly ahead of the 98.7 consensus forecast by economists polled by the Wall Street Journal.

The NFIB survey is a monthly snapshot of small businesses in the US, which account for nearly half of private sector jobs. Economists look to the report to read up on domestic demand and extrapolate hiring and wage trends to the broader economy.

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In December, seven of the 10 indexes that make up the headline figure rose, while three declined.

The increase in confidence was driven by plans by more firms to increase employment and capital outlay, improved earnings, and a modest improvement in expectations of business conditions over the next six months.

However, owners remain widely pessimistic about future economic conditions as the indicator has fallen 23 points over the past six months, said Bill Dunkelberg, chief economist at NFIB.

The survey data showed that demand for labor and goods is at historic highs, but challenges related to employees remain.

Nearly half of small-business owners reported job openings that could not be filled, while plans to fill open positions remain at a record high. The report noted that nearly 95% of those hired or trying to be hired reported few or no qualified applicants for the positions they were trying to fill.

The number of firms planning capital outlays over the next few months rose two percentage points from November to 29%, but the report said investments are unlikely to improve, while owners are pessimistic about future business conditions. have remained.

According to respondents, the supply-chain disruptions continued to be widespread. Owners who reported that supply-chain disruptions had a significant impact on their business increased one percentage point to 36%.

As per the survey, price increase activity was high but moderated somewhat as compared to November. About 57% of owners reported an increase in the average selling price, up from 59% in the previous month.

The most important problem owners face when operating their business is the quality of labor, which is closely followed by inflation, the data shows.

“Inflation is at its highest level since the 1980s and is having a huge impact on the ability of owners to manage their businesses,” said Mr. Dunkelberg.

Write to Xavier Fontdegloria at [email protected]

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