Small business optimism in the United States unexpectedly fell to a minimum of seven months in December, as owners became increasingly concerned about the new economic policy of the Biden government and the spread of coronavirus infections triggered new restrictions.
The National Federation of Independent Businesses said on Tuesday that its sentiment index fell 5.5 points to 95.9.
The result was a sharp decline from last month’s 101.4 and weaker than the average forecast of 102 in the Econoday economist poll.
“This month’s decline in small business optimism is historically very large and most of the decline was due to the prospects for sales and business conditions in 2021,” said NFIB chief economist Bill Dunkelberg.
Nine of the 10 components of the index decreased and only one – the current stock indicator – improved. Owners who expected better business conditions in the next six months fell sharply, dropping 24 points to a 16% net loss.
The share of homeowners who think it is a good time to expand has dropped four percentage points to 8%. Sales expectations in the following three months fell 14 points, to negative 4% net. Plans to increase payroll fell four percentage points to 22%.
“Small businesses are concerned about the potential new economic policy in the new administration and the increased spread of COVID-19, which is causing new government closings required by the government across the country,” said Dunkelberg.