NFIB small business optimism edges higher in December
|Summary
Small Business Owners Are Battling Staffing Shortages and Rising Costs
The NFIB Small Business Optimism Index edged 0.5 points higher in December to 98.9. Seven of the index's ten components increased during the month, led by owners' expectations for earnings, economic conditions and staffing. Business owners are having an unusually tough time hiring the workers they need. Staffing concerns and inflation remain the most pressing issues among small business owners. Supply chains issues appear to have eased a bit, however. The proportion of business owners that said their current inventory was "too low" fell six points in December and the proportion of firms planning to increase inventories fell two points.
The NFIB survey likely did not pick up much of the impact from the latest surge in COVID and associated staffing difficulties that have arisen since. We expect the January data to fall back somewhat, reflecting the rising number of workers that have had to miss work due to COVID, requiring them to isolate themselves for a few days. Consumer engagement appears to be holding up relatively well, however, so any dip should be relatively short. That said, the net share of business owners expecting economic conditions to improve over the next six months remains exceptionally low at -35%, even though it edged three points higher in December.
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