Peace Garden News

The NFIB Small Business Optimism Index increased by 3.4 points in December, reaching 105.1, marking the highest level since October 2018 and surpassing the 51-year average of 98 for the second consecutive month. The index's Uncertainty Index also fell by 12 points to 86.

"Optimism on Main Street continues to grow with the improved economic outlook following the election," said NFIB Chief Economist Bill Dunkelberg. He noted that small business owners are feeling more confident about the economic agenda of the new administration, expecting economic growth, lower inflation, and positive business conditions due to anticipated pro-business policies.

Don Larson, NFIB North Dakota State Director, stated, "With 20% of businesses nationwide viewing this as a good time to expand, our North Dakota members are positioning themselves for growth." He suggested that state lawmakers could further support this momentum by passing legislation favorable to small businesses.

Key findings from the report include a rise in owners' expectations for economic improvement by 16 points from November to a net 52%, which is the highest since late 1983. Additionally, those believing it is a good time to expand their business rose six points to 20%, and expectations for higher real sales volumes increased eight points to a net 22%.

In terms of employment challenges, NFIB's monthly jobs report indicated that a seasonally adjusted 35% of small business owners reported unfilled job openings in December. Of those hiring or attempting to hire during this period, 89% encountered few or no qualified applicants.

Capital outlays were reported by 56% of owners over the past six months—an increase of two points from November—with expenditures mainly on new equipment (37%), vehicles (24%), and facility improvements (16%). Looking ahead, capital outlay plans dropped slightly with a seasonally adjusted projection at 27%.

Despite optimism in several areas, some challenges persist. Twenty percent of owners cited inflation as their primary concern in operating their businesses. Labor quality was another significant issue for small business owners.

Reports showed price hikes across various sectors such as finance (56%), retail (38%), construction (30%), and transportation (30%). Meanwhile, compensation adjustments were less frequent compared to previous months.

Profit trends remained stable with reports indicating unchanged profit levels from November. Among those experiencing lower profits, factors included weaker sales and increased material costs; conversely, higher profits were attributed mainly to sales volumes.

Finally, borrowing needs were largely met according to most respondents: only two percent reported unmet needs while four percent identified financing as their top issue in December.

The NFIB Research Center has been collecting data on Small Business Economic Trends through quarterly surveys since late 1973 and monthly surveys since 1986. The latest survey was conducted in December 2024.