Optimism among America’s small businesses soared in December by the most since 1980 as expectations about the economy’s prospects improved dramatically in the aftermath of the presidential election.
The National Federation of Independent Business’s index jumped 7.4 points last month to 105.8, the highest since the end of 2004, from 98.4. While seven of the 10 components increased in December, 73% of the monthly advance was due to more upbeat views about the outlook for sales and the economy, the group said.
Small companies represent more than 99% 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.
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 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, CEO of the NFIB, said.
“Small business is ready for a breakout, and that can only mean very good things for the U.S. economy,” Duggan added.” Business owners are feeling better about taking risks and making investments.”
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%. Some 29% say they will boost capital outlays within six months.
By Vince Golle