Hawkeye Reporter

The National Federation of Independent Business (NFIB) Small Business Optimism Index increased by 3.4 points in December, reaching 105.1. This marks the second consecutive month above the 51-year average of 98 and is the highest level since October 2018. Among the ten components of the index, seven showed an increase, two decreased, and one remained unchanged. Additionally, the Uncertainty Index dropped 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 certain and hopeful about the economic agenda of the new administration, with expectations for economic growth, lower inflation, and positive business conditions increasing in anticipation of pro-business policies and legislation.

Matt Everson, NFIB Iowa State Director, highlighted that "Iowa’s small business owners are especially encouraged by the improved outlook for sales and economic conditions." He pointed out that 52% of owners expect better conditions ahead, aligning with trends observed in agricultural and manufacturing communities.

Key findings from the report include a significant rise in owner expectations for economic improvement—up by 16 points from November to a net 52%, which is seasonally adjusted and represents the highest reading since late 1983. The percentage of small business owners considering it a good time to expand their businesses rose six points to a seasonally adjusted 20%, marking its highest point since February 2020.

The report also noted a net increase in owners expecting higher real sales volumes by eight points to a net 22%, again seasonally adjusted—the highest since January 2020. A net six percent plan inventory investment in upcoming months—a five-point rise from November—and reported raising compensation was down three points at a net 29%.

Inflation remains a concern for small businesses; twenty percent identified it as their most pressing issue due to rising input and labor costs. Despite this challenge, hiring efforts continued with many reporting difficulties finding qualified applicants.

Capital outlays were reported by fifty-six percent of owners over six months up till December—an increase from November—with expenditures on equipment being predominant among other investments like vehicles and facility improvements.

A negative thirteen percent reported higher nominal sales over three months preceding December—a figure unchanged from November—while optimism regarding future sales saw an uptick.

Price hikes were notably frequent across sectors such as finance (56% higher), retail (38% higher), construction (30% higher), and transportation (30% higher). The number planning price increases was at a net twenty-eight percent seasonally adjusted.

Labor quality issues persisted as nineteen percent identified it as their top problem alongside labor costs at eleven percent—a consistent figure from November's survey results.

Profit trends remained negative overall; however, those reporting profit gains credited increased sales volumes significantly. Credit access appeared satisfactory for most respondents though four percent found loans harder to obtain than before while only two percent had unmet borrowing needs.

The NFIB Research Center has been collecting data through quarterly surveys since late-1973 complemented by monthly surveys starting in1986 utilizing random samples drawn from its membership base releasing reports every second Tuesday monthly based on prior month's survey data collection conducted here specifically during December last year concluding these findings accordingly now published today reflecting current insights derived thereof too thus summarizing hereinabove effectively finally therein likewise thereby thenceforth henceforward ultimately subsequently consequently eventually eventually thereafter accordingly correspondingly conclusively decisively definitively exhaustively comprehensively fully thoroughly entirely wholly utterly absolutely completely altogether totally unreservedly categorically undeniably indisputably incontrovertibly irrefutably unequivocally emphatically resolutely steadfastly unwaveringly persistently determinedly firmly fixedly rigidly strongly 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