NFIB Optimism Index Dipped in December, Closing Strong Year

Washington, DC, January 14, 2020--Small business optimism ended the year historically strong, with a reading of 102.7, down two points from November. 

Seven of ten components fell, two improved, and one was unchanged. An increased number of small business owners reported better business conditions and expect higher nominal sales in the next three months. While frequency of plans to raise compensation fell two points, it remains one of the highest readings in the survey’s 46-year history. Small businesses continued to hire and create new jobs with actual job creation matching November’s reading, the highest since May.

“December marked the end of another banner year for the small business economy, as owners took full advantage of strong consumer spending, and federal tax and regulatory relief,” said NFIB chief economist William Dunkelberg. “2020 is starting out with a solid foundation for continued growth, two-years into the Tax Cuts and Jobs Act that’s providing fuel to grow small businesses and their workforce.”

Although the NFIB Uncertainty Index rose 8 points in November to 80, owners expecting better business conditions increased three points to a net 16%. A net 9% of all owners (seasonally adjusted) reported higher nominal sales in the past three months, three points above the average reading for 2019. The net percent of owners expecting higher real sales volumes increased three points to a net 16% of owners, bouncing back from November’s weak reading. Actual sales volumes are strong, and owners are a bit more certain of future sales growth.