Economic Snapshot: Small business optimism at its highest level since 2004

December marked the second consecutive month of record-breaking small business optimism, now at its highest level in over 12 years.

NFIB Small Business Optimism Index

The National Federation of Independent Business Index of Small Business Optimism reached 105.8 in December, increasing 7.4 percent and rocketing the index to its highest level since 2004.

“We haven’t seen numbers like this in a long time,” said NFIB President and CEO Juanita Duggan. “Small business is ready for a breakout, and that can only mean very good things for the U.S. economy.”

The number of owners expecting better business conditions soared 38 points from a net 12 percent in November to a net 50 percent in December.

“Business owners who expect better business conditions accounted for 48 percent of the overall increase,” said NFIB Chief Economist Bill Dunkelberg. “The December results confirm the sharp increase that we reported immediately after the election.”

The other two big movers were “Sales Expectations” and “Good Time To Expand,” which jumped 20 percentage points and 12 percentage points, respectively.

Sixty-three percent of respondents made capital outlays, an eight-point increase over November. The net percent of owners reporting inventory gains increased six points.

However, despite optimism, hiring activity remained flat in December. Job creation increased by 0.01 workers per firm and job openings dropped two points. According to the NFIB Jobs report, released last week, finding qualified workers remains a persistent problem for small business owners.

“The labor market is getting tighter,” said Dunkelberg. “That’s good news for workers because they can command higher compensation, but many small business owners aren’t yet confident enough to raise prices to offset the higher labor costs. Owners are still in a pinch, but the overall picture for December was very positive.”

Employment situation

The unemployment rate and the number of unemployed persons were little changed in December, at 4.7 percent and 7.5 million persons, respectively. Both measures edged down in the fourth quarter after showing little net change earlier in 2016.

The number of long-term unemployed was essentially unchanged at 1.8 million in December and accounted for 24.2 percent of the unemployed. In 2016, the number of long-term employed declined by 263,000.

The number of persons employed part time for economic reasons was essentially unchanged at 5.6 million in December, but was down by 459,000 over the year.

In December, 1.7 million persons were marginally attached to the labor force, little changed from the previous year. Among the marginally attached, there was 426,000 discouraged workers in December, down by 237,000 from a year earlier.


The number of job openings on the last business day of November was little changed from October, at 5.5 million, and the job openings rate was 3.7 percent. Job openings increased for state and local government, excluding education, and state and local government education.

The number of hires was essentially unchanged at 5.2 million in November and the hires rate as 3.6 million. Hires increased in state and local government education but decreased in retail trade.

There were 5.0 million separations in November, little changed from October, and the separations rate was 3.5 percent. Within separations, the number of quits was little changed at 3.1 million and the quits rate was 2.1 percent. Quits increased in construction, wholesale trade and educational services.

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