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U.S. small business confidence surged to the highest level in nearly 3.5 years in November amid post-election euphoria.
The National Federation of Independent Business (NFIB) said on Tuesday its Small Business Optimism Index jumped 8.0 points to 101.7 last month, the highest level since June 2021. Donald Trump won the race for the White House and his Republican Party clinched control of the U.S. Congress in last month’s elections.
Small business owners tend to lean Republican and the sharp increase in confidence had been widely anticipated by economists.
Other sentiment surveys, including the University of Michigan’s surveys of consumers, have also improved in the aftermath of the Nov. 5 election, though along party lines.
The share of small business owners expecting the economy to improve soared 41 points to 36%, the largest since June 2020.
The proportion saying now is a good time to expand their business rose to levels last seen nearly 3.5 years ago. More businesses expected higher sales growth and the ranks of those saying inflation was their top issue declined.
The survey’s uncertainty index dropped 12 points from a record high of 110 in October.
Labor remains scarce at small businesses, especially in the transportation, construction and professional services industries. The share of businesses planning to hire more workers increased by 3 points to 18%, the highest in a year.
About 32% of owners reported raising compensation, up a point from October. The share planning to increase compensation over the next three months vaulted 5 points to 28%, the highest reading this year.
About 28% planned price hikes, up 2 points from October.
“Wage hikes are necessary to maintain current employment and hopefully to help fill vacancies,” said Bill Dunkelberg, chief economist at the NFIB.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)
