NFIB Small Business Optimism Index Remains High, So Does Uncertainty | 2020


WASHINGTON, D.C. (Nov. 10, 2020) | The NFIB Optimism Index remained at 104.0 in October, unchanged from September and a historically high reading. Four of the ten components of the index improved, five declined, and one was unchanged.


Although all of the data was collected prior to Election Day, a six-point increase in the NFIB Uncertainty Index to 98 was likely driven by the election and uncertain conditions in future months due to the COVID-19 pandemic and possible government-mandated shutdowns, said NFIB Chief Economist Bill Dunkelberg.

The uncertainty reading was the highest reading since November 2016.

“Leading up to the presidential election, small businesses continued to focus on stabilizing their businesses but were uncertain about the future economic conditions due to COVID-19 government regulations on all levels,” said Dunkelberg. “We see solid momentum going into the 4th quarter, and another good quarter could get the GDP back to its 2019 closing levels.”

Other key findings:

  • Earnings trends over the past three months improved nine points to a net negative 3% reporting higher earnings.
  • Earnings trends have improved to pre-crisis levels, up 32 points since June.
  • Inventory investment plans for the next three to six months increased 1 point to a net 12%, a record high.
  • Real sales expectations in the next three months increased 3 points to a net 11% expecting gains.
  • Owners expecting better business conditions over the next six months declined 5 points to a net 27%.

23% (seasonally adjusted) | Reported raising compensation and a net 18% plan to do so in the coming months, up 2 points.

8% | Survey respondents who cited labor costs as their top business problem (down 1 point)

22% | Said labor quality was their top business problem, exceeding taxes, regulations, and weak sales.

35% | Percentage of construction owners who report finding qualified workers as their top issue, slowing new home production.

53% | The percentage of owners who reported capital outlays in the last six months, unchanged from September. (Historically, this is a poor performance because it doesn’t boost current GDP and it impairs the future growth in worker productivity and pay, according to Dunkelberg.)

36% | Of those making expenditures, of owners reported spending on new equipment (down 2 points), 20% acquired vehicles (down 3 points)

16% | Improved or expanded facilities (unchanged)

5% | Acquired new buildings and land for expansion (up 1 point),

12% | Spent money for new fixtures and furniture (up 4 points).

27% | Plan capital outlays in the next few months, down 1 point from September.


Small businesses have continued to see improvements in foot traffic and sales

3% | Reported that all of their borrowing needs were not satisfied (up 1 point),

29% | Reported all credit needs were met (down 4 points),

56% | Said they were not interested in a loan (up 1 point).

3% | Reported their last loan was harder to get than in previous attempts (up 1 point).

1% | One percent of respondents reported that financing was their top business problem, unchanged from last month.

For full report, see NFIB.com.

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