U.S. Small-Business Confidence Soars

WASHINGTON (Reuters) – U.S. small-business confidence surged to the highest level in nearly 3-1/2 years in November amid post-election euphoria.

The National Federation of Independent Business (NFIB) reported that its Small Business Optimism Index jumped 8.0 points to 101.7 last month, the highest level since June 2021. This spike follows Donald Trump's victory in the presidential election and the Republican Party's control of U.S. Congress.

Small business owners often lean Republican and the confidence increase was anticipated by economists. Additional sentiment surveys, such as the University of Michigan's consumer surveys, also showed improvements post-election, albeit along party lines.

The percentage of small business owners expecting economic improvement skyrocketed 41 points to 36%, the largest increase since June 2020.

The proportion stating that it is a good time to expand reached levels not seen in nearly 3-1/2 years. Moreover, businesses projected higher sales growth and the number citing inflation as their primary concern declined.

The uncertainty index from the survey decreased 12 points from a record high of 110 in October.

Labor shortages persist at small businesses, particularly in transportation, construction, and professional services. The share of businesses planning to hire more workers rose by 3 points to 18%, the highest in a year.

About 32% of owners reported raising compensation, up 1 point from October. Additionally, the percentage planning to increase compensation over the next three months surged 5 points to 28%, the highest reading this year.

About 28% indicated plans for price hikes, an increase of 2 points from October.

Bill Dunkelberg, chief economist at the NFIB, stated, “Wage hikes are necessary to maintain current employment and hopefully to help fill vacancies.”