US: NFIB Small Business Optimism Index

Tue Mar 10 08:00:00 CDT 2015

Consensus Consensus Range Actual Previous
level 99.0 96.5 to 100.0 98.0 97.9

Heavy weather in February didn't hurt the small business optimism index which edged 1 tenth higher to 98.0. The strongest component right now, and the one that gained the most in the latest report, is job openings hard to fill. The gain here points to lack of slack in the jobs market, at least for skilled workers. The second strongest component, plans to increase capital outlays, shows no change but the level does point to business confidence and the need to hire in future months. Most readings in the report show very little change with inflation readings showing no pressure and credit needs at an historic low.

Market Consensus Before Announcement
The NFIB Small Business Optimism 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 were a couple of positives including inventories, which are considered too low, and current job openings.

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.