US small-business sentiment rose 2.3 points to 104.7, the biggest jump since May 2018, according to the November optimism survey from the National Federation of Independent Business.
It shows a reversal from "previous months of clatter" about a looming recession, the report noted. Positive earnings and expectations that business conditions will get better drove the results, according to the survey.
"Owners are aggressively moving forward with their business plans, proving that when they're given relief from the government, they put their money where their mouth is, and they invest, hire, and increase wages," said William Dunkelberg, the chief economist at NFIB.
Small businesses are showing signs of high optimism, seemingly thwarting any fear that a recession will hit before the end of the year, according to the November National Federation of Independent Business sentiment survey released Tuesday.
Small-business optimism spiked 2.3 points to 104.7 in November, the biggest jump since May 2018, survey results showed. Positive earnings, owners who want to continue to expand business, and those expecting business conditions to improve drove the second straight monthly gain for the index.
The report comes after Friday's blockbuster jobs numbers showed that the US economy continues to gain at a steady clip. The "historic run may defy the expectations of many, but it comes as no surprise to small business owners," wrote William Dunkelberg, the chief economist at NFIB, in a press release.
That's because small business owners "understand what a supportive tax and regulatory environment can do for their companies," Dunkelberg wrote. Small businesses have benefited from the Tax Cuts and Jobs Act of 2017, he said, and are using savings from the tax break to expand their businesses.
The positive November report is a stark contrast from the "previous months of clatter" about a possible recession, Dunkelberg wrote. In addition, it looks like impeachment proceedings have had little impact on small business sentiment, the report showed.
"Owners are aggressively moving forward with their business plans, proving that when they're given relief from the government, they put their money where their mouth is, and they invest, hire, and increase wages," said Dunkelberg.
Here are other highlights from the report:
- Earnings, or the frequency that owners report positive profit trends, rose 10 points. It's now one point below the May 2018 record.
- Net 12% of all owners (seasonally adjusted) reported higher nominal sales in the past three months. That's the highest level since May 2018.
- Job creation jumped to the highest level since May. And, a net 30% of small business owners reported raising compensation, while 26% plan to do so in the coming months - the highest level since December 1989.
- Stronger profits negated some cost pressure, especially labor. That limited the need to raise prices.
- Sixty percent of small-business owners reported making capital outlays, up from October.
- Three percent said that their borrowing needs were not being met, near a record low.
- Inflationary pressures are weak - the net percent of owners raising average selling prices rose to 12%, up 2 percentage points, seasonally adjusted. Price hikes were the highest in retail trade and construction.
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