The NFIB Small Business Optimism Index rose 3.5 points in November to 98.4. Small business optimism remained flat leading up to Election Day and then rocketed higher as business owners expected much better conditions under new leadership in Washington, according to a special edition of the monthly NFIB Index of Small Business Optimism.
“This month we bifurcated the data to measure the results before and after the election,” said NFIB Chief Economist Bill Dunkelberg. “The November index was basically unchanged from October’s reading up to the point of the election and then rose dramatically after the results of the election were known.”
At 98.4, the full November index is just above the 42-year average, only the third time since 2007 that it has broken into above-average territory.
Plans to hire jumped five points from the previous month. Expected higher sales rose from a net one percent in October to net 11 percent in November. But the blockbuster was expected better business conditions, which shot from a net -7 percent to 12.
“Even without separating the data, the November results paint a starkly different picture than what we’ve seen in the last 94 months,” said Dunkelberg.
Reported job creation remained weak in November with the seasonally adjusted average employment change per firm posting a gain of 0.02 workers per firm. Fifty-eight percent reported hiring or trying to hire (+3 points), but 52 percent reported few or no qualified applicants for the positions they were trying to fill. Sixteen percent of owners cited the difficulty of finding qualified workers as their ‘Single Most Important Business Problem’.
Thirty-one percent of all owners reported job openings they could not fill in the current period, up 3 points and the highest reading in this recovery. The increase accurately predicted the decline in the unemployment rate from what many already call a “full employment” level. Sixteen percent reported using temporary workers, up 1 point. A seasonally adjusted net 15 percent plan to create new jobs, up 5 points from October and the strongest reading in the recovery.
The net percent of all owners (seasonally adjusted) reporting higher nominal sales in the past three months compared to the prior three months deteriorated 1 percentage point to a net negative 8 percent. Reports of stronger consumer spending in the government numbers did not improve reports of sales gains.
Seasonally adjusted, the net percent of owners expecting higher real sales volumes rose 10 points to a net 11 percent of owners, a strong showing, but still historically quite weak.
Fifty-five percent reported capital outlays, down 2 points from October and trending down on a quarterly basis. The percentage of owners making an outlay peaked for this recovery in July 2015 at 61 percent, revisited that percentage in January but has faded since.
A seasonally adjusted net 21 percent of owners reported raising worker compensation, down 4 points. The net percent planning to increase compensation dropped 4 points to 15 percent.