|level||98.2||97.0 to 99.2||95.2||98.0|
Optimism among small businesses fell sharply in March, down 2.8 points to 95.2 from what was an upbeat 98.0 in February. Among components, the outlook on the economy fell back the most which is squarely in line with many other economic reports where expectations have been on a noticeable decline. Most other readings in today's report show sizable declines including expansion plans and earnings trends. The economic slowing of the first quarter appears to have dented economic confidence -- although an uplift, hinted at perhaps in this morning's very strong retail sales report, may be in store for the spring.
Market Consensus Before Announcement
The NFIB Small Business Optimism Index in February edged 1 tenth higher to 98.0. The strongest component was 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, showed no change but the level does point to business confidence and the need to hire in future months. Most readings in the report showed very little change with inflation readings showing no pressure and credit needs at an historic 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.
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