Small business optimism surges in November
Summary
Compensation pressures not helping inflation
Small business optimism surged in November alongside a promptly decided election outcome. The headline index soared eight points to 101.7, its highest reading since June 2021. After years of elevated inflation and interest rate hikes, November marked the first month since January 2022 that NFIB small optimism rose above its longer-term average of 98. While the election outcome likely bolstered confidence, back-to-back rate cuts from the Federal Reserve also improved lending conditions for small businesses. The share of firms anticipating better economic conditions, better lending conditions and better sales all improved over the month. Although job openings continued to trend lower through the monthly volatility, hiring plans made a notable jump, reaching its highest reading over the past year. More resilient small business labor demand seems to be putting upward pressure on compensation plans, which may add a complication to inflation’s already stubborn descent. The percent of small firms raising selling prices rebounded to 24% on net, just one point shy of the share one year ago.
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