US NFIB Survey: December Optimism Index -2.6 to 104.9 - Text

     WASHINGTON (MNI) - The following are excerpts from the National Federation

of Independent Business' monthly Small Business Optimism index published

Tuesday:

     Small business confidence blasted off the day after the 2016 election and

remained in the stratosphere for all of 2017, making last year an all-time

record setter for the NFIB Index of Small Business Optimism, released today.

     "2017 was the most remarkable year in the 45-year history of the NFIB

Optimism Index," said NFIB President and CEO Juanita Duggan. "With a massive tax

cut this year, accompanied by significant regulatory relief, we expect very

strong growth, millions more jobs, and higher pay for Americans."

     The Optimism Index for last month came in at 104.9, slightly lower than the

near-record November report but still a historically exceptional performance.

That makes 2017 the strongest year ever in the history of the survey. The

average monthly Index for 2017 was 104.8. The previous record was 104.6, set in

2004.

     "We've been doing this research for nearly half a century, longer than

anyone else, and I've never seen anything like 2017," said NFIB Chief Economist

Bill Dunkelberg. "The 2016 election was like a dam breaking. Small business

owners were waiting for better policies from Washington, suddenly they got them,

and the engine of the economy roared back to life."

     Two of the December components posted gains, five declined, and three

remained unchanged. Moving the Index moderately lower were declines in Expected

Better Business Conditions (11-point decline) which tends to fluctuate sharply

and Inventory Plans (8-point decline). Small business owners were bedeviled by a

labor shortage in 2017 that grew more intense as optimism rose. The NFIB Jobs

Report last week showed that problem reaching record levels.

     Offsetting the dip in Expected Better Business Conditions was a

dramatic,14-point improvement in Actual Sales for December. In November, a net

negative five percent of all firms reported sales increases. A net nine percent

reported higher sales in December, indicating a very strong holiday season for

small business.

     "There's a critical shortage of qualified workers and it's becoming a real

cost driver for small businesses," said Dunkelberg. "They are raising

compensation for workers in order to attract and keep good employees, but that's

a positive indicator for the overall economy."

     Driving record optimism in 2017 was the expectation of better economic

policies from Washington. Suspending the regulatory assault on business and now

a massive tax cut answered two of the three top concerns for small business

owners, according to NFIB research.

     "The lesson of 2017 is that better policies make for better economic

results," said Duggan. "The evidence is overwhelming that small business owners

pay close attention to Washington, and that federal policies affect their

decisions on whether to hire, whether to invest, whether to grow inventory, and

whether to seek capital."

     Optimism Components:        Seas Adj Level %     Change

     PLANS TO INCREASE EMPLOYMENT      20                -4

     PLANT TO MAKE CAPITAL OUTLAYS     27                 1

     PLANS TO INCREASE INVENTORIES     -1                -8

     EXPECT ECONOMY TO IMPROVE         37               -11

     EXPECT RETAIL SALES HIGHER        28                -6

     CURRENT INVENTORY                 -2                 0

     CURRENT JOB OPENINGS              31                 1

     EXPECTED CREDIT CONDITIONS        -4                 0

     NOW A GOOD TIME TO EXPAND         27                 0

     EARNINGS TRENDS                  -15                -5

     TOTAL CHANGE                      --               -30

--MNI Washington Bureau; tel: +1 202-371-2121; email: kevin.kastner@marketnews.com

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