The National Federal of Independent Business said Tuesday its optimism index rose 3.8 points to 204, a level it last reached in January. That is among the highest readings recorded in the closely watched gauge of business confidence. Economists had expected the index to more or less hold steady near last month’s reading of 100.2. The range of estimates was between 99 and 102, so this was twice as strong as the most bullish forecast.
The improvement comes as many businesses have been able to open more fully. It suggests that the end of small-business relief programs, which mostly wrapped up in August, did not hurt business owners as much as feared.
The threat of a second round of shutdowns, however, still hangs over businesses. The NFIB’s uncertainty index climbed to 92, higher than it was when infections were at their height this summer or lockdowns were at their most stringent this spring.
“As parts of the country continue to open, small businesses are seeing some improvements in foot traffic and sales,” said NFIB Chief Economist Bill Dunkelberg. “However, some small businesses are still struggling financially to operate at full capacity while navigating state and local regulations and are uncertain about what will happen in the future.”
Every component of the index apart from expected credit conditions improved. With interest rates already extremely low, there is not much room for credit conditions to improve. Plans to increase employment, make capital outlays, and grow inventories all rose. So did the share of business owners expecting economic conditions to get better over the next three months. Expectations for sales also improved and more owners said now is a good time to expand.
The NFIB is a trade association for small business owners.