Small business owners 🌳are getting less pessimistic, with expectations for sales rising to their highest levels in more than a year, while also reporting fewer concerns about labor quality, showing worker shortages may be slowing. 

The National Federation of Independent Business (NFIB) Small Business Optimism Index for December came in above expectations at 91.9, an increase of 1.3 points from the prior month, and above its 2023 average of 90.7. It’s the highest reading since July. Despite the uptick, the index remained mired at historically low levels compared to its average of 98 over the last 50 years.

“Small businesses owners turned a solid notch less glum in December, paralleling a big jump in consumer confidence,” said Bill Adams, chief economist for Comerica Bank, citing recent monthly surveys from The Conference Board and the 澳洲幸运5官方开奖结果体彩网:University of Michigan. 

Overall, the outlook for generꦅal business conditions was at its highest level in five months and significantly higher than June 2022, when peaking inflation dampened sentiment. The survey showed that owners’ expectations for real sales rose to their highest levels since early 2022, and earnings expectations shot higher. The outlook for the economy and credit conditions improved, helping push up the overall index.

However, the survey still showed small business owners had worries, with 23% saying inflation was their top problem, with labor quality and taxes also being cited. Only 8% of businesses said it was a good time to expand, the same as in November's survey. And while expectations for business conditions improved, the measure still registered a net negative 36%, indicating that a sizable majority feel that the outlook for the next six months isn't good.

Furthermore, the businesses reported pulling back on hiring, with 16% saying they planned to increase employment, down from 18% in November. Official government measures of the labor market have 澳洲幸运5官方开奖结果体彩网:showed a similar cooling trend.

“Small business owners remain very pessimistic about economic prospects this year,” NFIB chief economist Bill Dunkelberg said in a statement. “🅰Inflation and labor quality have consistently been a tough complication for small business owners, and they are not convinced that it will get better in 2024.”

Employers have had trouble hiring workers since the 澳洲幸运5官方开奖结果体彩网:pandemic prompted more retirements, with job openings soaring as they 澳洲幸运5官方开奖结果体彩网:continue to add workers, helping keep unemployment low and the 澳洲幸运5官方开奖结果体彩网:j🙈ob market advantageous for workers. But while business owners cite poor labor quality as a persistent concern, the 20% reporting it as their most pressing issue was the lowest since 2020, which Adams said showed “labor shortages are abating.”

The outlook of business owners may be influenced by partisan perceptions in addition to economic realities. The NFIB survey tends to be "extremely strongly correlated with Republican consumers’ view of the economy," according to a 2022 analysis by UBS. Notably, the index shot to its all-time high after the election of Donald Trump in 2016 and has wallowed at low levels during the Biden administration.