Minnesota State Wire

The NFIB Small Business Optimism Index experienced a notable rise of 3.4 points in December, reaching 105.1. This marks the second consecutive month the index has been above the long-term average of 98 and is the highest level recorded since October 2018. Among the components of the index, seven saw an increase, two decreased, and one remained unchanged. Meanwhile, the Uncertainty Index fell by 12 points to 86.

"Optimism on Main Street continues to grow with the improved economic outlook following the election," stated NFIB Chief Economist Bill Dunkelberg. He added that small business owners are increasingly hopeful about the new administration's economic agenda, expecting growth and positive conditions due to anticipated pro-business policies.

Jon Boesche, NFIB Minnesota State Director, remarked on how reduced uncertainty is positively impacting Minnesota's small businesses: "With the Uncertainty Index falling 12 points to 86, our members are feeling more confident about making strategic decisions." He urged state legislators to prioritize reducing regulatory burdens and financial strains on small businesses.

Key findings from the report highlight that expectations for economic improvement rose by 16 points to a net 52%, a peak not seen since late 1983. The belief that it is a good time for business expansion increased six points to 20%, marking its highest point since February 2020. Furthermore, expectations for higher real sales volumes went up eight points to a net 22%.

Regarding employment, a seasonally adjusted figure of 35% of small business owners reported unfilled job openings in December, slightly down from November. Of those hiring or attempting to hire last month, most cited challenges in finding qualified candidates.

Capital outlays were reported by 56% of owners over six months; expenditures included new equipment (37%), vehicles (24%), and facility improvements (16%). A net negative percentage indicated higher nominal sales over three months compared to November levels.

Inflation remains a critical concern for many owners—20% identified it as their main issue due to rising input and labor costs. Price hikes were frequently observed across various sectors including finance and retail.

The frequency of positive profit trends reports remained unchanged at a net negative rate compared to previous months. Among those reporting lower profits, reasons included weaker sales and increased material costs.

Lastly, financing was less problematic than before; only four percent reported it as their top issue in December.

Data from these surveys have been collected quarterly since late 1973 and monthly since 1986 by the NFIB Research Center.