Small Business Owners More Optimistic at 2020

The numbers: Small businesses turned more optimistic about sales and profits in the first month of 2020, but they are still struggling to find qualified workers, according to a closely followed survey.

The National Federation of Independent Business said its index of small-business optimism rebounded from a small dip in at the end of last year, rising to 104.3 points in January from 102.7 in December.

Business owners were more confident that sales would continue to rise and help support higher profits, the NFIB said.

What happened: The net percent of owners who expect higher inflation-adjusted sales in the months ahead rose by 7 points to 23%.

By and large, business owners were nonplussed by the impeachment trial of President Donald Trump. A gauge that measures uncertainty was basically unchanged.

The biggest worry of small businesses continues to be a shortage of skilled employees available for hire. A quarter of owners say it’s their No. 1 problem — more than taxes or regulations. Many say they’ve increased wages and benefits to attract talent.

In January, six of the 10 Index components rose, two fell and two were unchanged.

Big picture: The optimism of small businesses remains near an all-time high even though the U.S. economy has slowed a bit from last spring. They generate most of their sales in the U.S. and have been shielded from the worst effects of the trade war with China.

What remains to be seen is if small businesses avoid any fallout from the coronavirus.

What they are saying? “Small businesses continue to build on the solid foundation of supportive federal tax policies and a deregulatory environment that allows owners to put an increased focus on operating and growing their businesses,” said NFIB chief economist William Dunkelberg.

Market reaction: The Dow Jones Industrial Average DJIA, +0.31% and S&P 500 SPX, +0.44% rose slightly on Monday and are at or near record highs, but Wall Street is still nervous about the coronavirus and its potential harm to the global economy.

The 10-year Treasury yield TMUBMUSD10Y, +0.32% slipped to 1.7%.

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