| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Index | 91.5 | 90.4 to 92.1 | 91.9 | 91.0 |
Highlights
The NFIB small business optimism index is up 0.9 point to 91.9 in July after 91.0 in June. The reading is a little above the consensus of 91.5 in the Econoday survey of forecasters. The July level is the highest since 91.9 in November 2022 but remains below its 49-year average of 98 for the 19th month in a row.
The uncertainty index is up 4 points at 89 in July from June which is at odds with the improvement in small business confidence. NFIB Chief Economistic Bill Dunkelberg said,"With small business owners' views about future sales growth and business conditions dismal, owners want to hire and make money now from solid consumer spending." The main challenges facing small businesses remain inflation (although to a lesser extent than before) and also a lack of skilled labor.
In July, five of 10 index components are up, 1 is down, and four are unchanged.
Expectations for the economy to improve are up 10 points to minus 30 percent in Jul, the highest reading since minus 28 percent in August 2021. Expectations for the economy to improve have not been positive since 8 percent in October 2020 at the end of a four-year stretch readings above 0.
The reading for earnings trend is down 6 points to minus 30 percent in July. This is not much different than the readings over the past year which have fluctuated a bit as the inflation data offer some relief while interest rates are moving upward.
The uncertainty index is up 4 points at 89 in July from June which is at odds with the improvement in small business confidence. NFIB Chief Economistic Bill Dunkelberg said,"With small business owners' views about future sales growth and business conditions dismal, owners want to hire and make money now from solid consumer spending." The main challenges facing small businesses remain inflation (although to a lesser extent than before) and also a lack of skilled labor.
In July, five of 10 index components are up, 1 is down, and four are unchanged.
Expectations for the economy to improve are up 10 points to minus 30 percent in Jul, the highest reading since minus 28 percent in August 2021. Expectations for the economy to improve have not been positive since 8 percent in October 2020 at the end of a four-year stretch readings above 0.
The reading for earnings trend is down 6 points to minus 30 percent in July. This is not much different than the readings over the past year which have fluctuated a bit as the inflation data offer some relief while interest rates are moving upward.
Market Consensus Before Announcement
The small business optimism index has been below, and often deeply below, the historical average of 98 for 18 months in a row. July's consensus is 91.5 versus 91.0 in June.
Definition
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 10 seasonally adjusted components based on the following questions: 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.
Description
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.
