Each month Thumbtack surveys its network of active professionals to learn what is affecting their perceptions of the local and national economy. By speaking to this unique sample of small business owners, it gives us unique insights into patterns of household spending and employment in the service sector.
Our December survey, conducted between December 7th and December 14th, received nearly 16,000 responses from business owners across the country. This round of data collection marks the third full year we have been asking these businesses the same set of questions. Data was collected quarterly through March of 2015 and has been collected monthly since that point.
Business Optimism Is Up
Small businesses in December reported their highest level of positive sentiment about the economy in months. After an increase in overall sentiment throughout 2014, small businesses reported a sharp decline in Sentiment throughout the summer of 2015 – this decline stopped in September and in December showed the first sign of reversing itself. Overall sentiment among small businesses has rebounded to levels not seen since August of this year:
Driving this strong recovery are improved expectations about the future for the overall economy, profits, and the financial stability of individual businesses. As these expectations have been fairly volatile through the course of the survey, perceptions of current economic conditions have largely remained flat.
Small businesses also reported a strong jump in plans to increase wages and reported the first improvement in their employment outlook in nearly a year.
This improvement is a great sign for the labor market – with the Federal Reserve’s long-awaited rate hike finally happening during our survey period, the relative optimism of small businesses shows they are looking to expand their businesses despite headwinds from higher borrowing costs.
Thumbtack’s Index continues to show similar directional trends but with less volatility than other widely-cited measurements of consumer and business sentiment, most likely due to its larger sample size – while the latest data from Thumbtack was drawn from a sample of 15,676 respondents, NFIB’s survey came from 601 useable responses, and the Michigan survey relies on around 500 telephone interviews.
In previous months we’ve looked at variation by industry, by state, or by region. This month we looked at the various metro areas where we received enough responses to rank, as well as looking at some historical data for 15 large metros.
Cities in the above table are ranked by their average monthly Small Business Economic Sentiment Index score since August. Looking at the historical data for these metros shows some familiar patterns from other analysis we have done – southern cities such as Houston, Atlanta, and Dallas are at the top of the list. September and October were the nadir of Index scores for each of the cities. Cities such as New York, Seattle, and Boston continue to underperform the nation as a whole, and other major cities, when it comes to perceptions of small business health.
Top Ranked Cities, December 2015
Bottom Ranked Cities, December 2015
You can explore the data further here and see how your city or state did relative to the rest of the nation.