Small US businesses more optimistic on sales outlook

[NEW YORK] Positive sentiment among US small businesses improved in November, largely due to a surge in optimism about the sales outlook.

The National Federation of Independent Business (NFIB) optimism index rose 0.8 points in November to a three-month high of 99, based on figures released on Tuesday (Dec 9).

Six of the 10 components that make up the gauge increased, while three decreased. One was unchanged.

A nine-point improvement in sales expectations was the biggest contributor to the overall increase in the optimism index, the NFIB said. A net 15 per cent of owners anticipate higher sales volumes in the next three months, the largest share since the start of the year.

Greater sales expectations helped to bolster hiring intentions. A net 19 per cent of small companies said that they plan to create new jobs in the next three months. This was up four points from October and the largest share this year.

Increased optimism about sales prospects surfaced despite mounting inflationary pressures. A net 34 per cent said that they raised their prices compared with three months ago – the largest share since March 2023 and an increase of 13 percentage points from October. 

Inflation concerns ranked as the second-biggest problem for small firms behind labour quality.

In addition to sales expectations and hiring intentions, the overall index was boosted by a slight improvement in plans to increase inventories and earnings trends.

Despite optimism for sales and earnings, business owners were less upbeat about the US economic outlook.

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A net 15 per cent of small-business owners say they expect the economy to improve in coming months, the percentage being a seven-month low. The uncertainty index also remained elevated. BLOOMBERG