US: NFIB Small Business Optimism Index

Tue Jan 13 08:00:00 CST 2015

Consensus Consensus Range Actual Previous
level 98.1 96.5 to 99.5 100.4 98.1

The small business optimism index is at its highest point of the recovery, since October 2006, up 2.3 points in December to 100.4. December's gain is broad based with 8 of 10 components advancing led by expectations for higher sales. Sentiment on expansion, capital outlays, and employment also posted solid gains. Inflation pressures remain muted though a sizable 22 percent of the sample do plan to raise prices in the months ahead which the report notes could be a source of future inflationary pressures. Today's report, especially following last week's employment report, offers notable evidence of economic strength.

Market Consensus Before Announcement
The NFIB Small Business Optimism Index surged 2.0 points in November 2014 to 98.1 for its highest reading of the recovery, going back to February 2007. The index is suddenly at its historic average of 98.0. The month was led by a huge gain in expectations that the economy will improve followed by expectations for higher sales. Earnings trends showed a small gain while plans to increase employment also rose though just barely. Inflation readings remain very low.

The small business optimism index is compiled from a survey that is conducted each month by the National Federation of Independent Business (NFIB) of its members. The index is a composite of ten seasonally adjusted components based on questions on the following: plans to increase employment, plans to make capital outlays, plans to increase inventories, expect economy to improve, expect real sales higher, current inventory, current job openings, expected credit conditions, now a good time to expand, and earnings trend.

Small businesses are responsible for a majority of new job creation and the NFIB focuses on this sector of the economy. The direction of the health of small businesses can portend changes in the stock market - especially small caps.