The NFIB Small Business Optimism Index rose 0.4 points in December to 95.2, well below the 42-year average of 98.

“Small-business owners will be listening to the President’s address tonight hoping to hear him talk about things that will grow the economy and help the little guys,” said NFIB Chief Economist Bill Dunkelberg. “In December, Congress made expensing permanent and passed other favorable tax changes that had an immediate impact on bottom lines. However, prospects for any other substantive policy changes in 2016 are not good.”   

Reported job creation faded a bit in December, with the average employment gain per firm falling to -0.07 workers from .01 in November, basically flat for the last few months. Fifty-five percent reported hiring or trying to hire (unchanged), but 48 percent reported few or no qualified applicants for the positions they were trying to fill. Fifteen percent reported using temporary workers, down 1 point. Twenty-eight percent of all owners reported job openings they could not fill in the current period, up 1 point and at the highest level for this expansion.

Sixty-two percent reported capital outlays, unchanged from November. Overall, capital spending was much stronger in November and December, reflecting growing certainty that expensing provisions would be renewed. Not only was it renewed, it was made permanent, giving small businesses some much needed certainty. The percent of owners planning capital outlays in the next 3 to 6 months rose 1 point to 26 percent, not a strong reading historically but among the best in this expansion.

Earnings trends improved 1 point to a negative 18 percent reporting quarter on quarter profit improvements. Far more owners are reporting profits lower quarter to quarter than higher.