U.S. NFIB small business optimism rises in November, plans about hiring and investments to fully crystallize

The U.S. NFIB’s small business optimism index rose in November, exceeding expectations. The index rose 3.5 points to 98.4, as compared with consensus expectations of a rise to 96.7. Now, the index is above its 42-year average. The details of the report were quite positive as eight of the ten subcomponents were up on the month, whereas on stayed the same and just one dropped.

Markedly, the share of companies anticipating the economy to rebound was up 19 points to 12 percent, whereas the share of firms projecting higher real sales was up 10 points to 11 percent, noted TD Economics. Labor market indicators were positive as unfilled job openings were up 3 points to 31 percent, whereas the share of companies intending to increase employment was up 5 points to 15 percent.

Meanwhile, earnings metrics lost momentum, with the share of companies ‘raising’ and ‘planning to raise’ worker compensation dropped 4 points each. However, both stayed higher on a trend basis. On the other hand, capital outlays took a step back, dropping 3 points to 24 percent. In spite of the rise in positivity, the uncertainty sub-index rose sharply by 12 points to 11, marking an unprecedented level for an index that has a long-term average of 66 points, said TD Economics.

The upcoming administration has committed to reduce taxes and tackle excessive regulation. As such, the boost in sentiment in November, although encouraging, was mostly expected, stated TD Economics. Looking past the post-election euphoria, there remains certain doubt as to how much would be delivered and how exactly key issues for small businesses would be handled.

“The unprecedented level of uncertainty suggests that key plans regarding hiring and investments, will likely fully crystallize only once the new administration steps into office and begins to implement its official agenda”, added TD Economics.

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