U.S. small business optimism unexpectedly dropped to a seven-month low in December as owners became increasingly concerned about the new economic policy of the incoming Biden administration and the spread of coronavirus infections caused renewed restrictions.
The National Federation of Independent Business said Tuesday its sentiment index fell 5.5 points to 95.9.
The result was a sharp drop from last month’s 101.4 and weaker than the median forecast of 102 in Econoday’s survey of economists.
“The decline in optimism for small business is very large this month and most of the decline was due to the outlook for sales and business conditions in 2021,” said NFIB chief economist Bill Dunkelberg.
Nine of the ten index components declined and only one – the benchmark of the current stock – improved. Owners expecting better business conditions over the next six months fell sharply, falling 24 points to a net negative 16 percent.
The share owners who think this is a good time to expand fell by four points to eight percent. Sales expectations over the next three months fell by 14 points to a net negative 4 percent. The plans to grow salaries fell by four points to 22 percent.
“Small businesses are concerned about potential new economic policies in the new administration and the increasing spread of COVID-19 that is causing renewed government assignments across the country,” Dunkelberg said.