US: NFIB Small Business Optimism Index

Tue Feb 10 08:00:00 CST 2015

Consensus Consensus Range Actual Previous
level 101.0 100.0 to 105.0 97.9 100.4

The small business sentiment index fell back but from the prior month's very strong reading, to a still respectable 97.9 in January from December's 9-year high of 100.4. The economic outlook was by far the weakest component in January with much smaller declines among other components. All told, 7 of 10 components fell back including sales expectations and earnings trends. But there are a couple of positives including inventories, which are considered too low, and current job openings. A separate reading on inflation shows no pressure.

Market Consensus Before Announcement
The NFIB Small Business Optimism Index was at its highest point of the recovery, since October 2006, up 2.3 points in December to 100.4. December's gain was 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 remained muted though a sizable 22 percent of the sample do plan to raise prices in the months ahead which the report noted could be a source of future inflationary pressures.

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.