| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Index | 91.7 | 90.2 to 91.9 | 91.3 | 91.9 |
Highlights
The NFIB small business optimism index is down 0.6 point to 91.3 in August after 91.9 in July. The reading is a little below the consensus of 91.7 in the Econoday survey of forecasters. NFIB noted that the index remains below its 49-year average of 98 for the 20th month in a row. The uncertainty index is down 3 points at 77 in August from July but remains elevated. Among survey respondents, 23 percent report that inflation"was their single most important problem in operating their business".
In August, 3 of 10 index components are up, 5 are down, and 2 are unchanged. Two index components have big moves, while most showed normal smaller month-to-month changes.
Expectations for the economy to improve are down 7 points to minus 37 percent in July, although the reading is not as deeply negative as in the first half of 2023. 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 the earnings trend is up 5 points to minus 25 percent in August. This is not much different from the readings over the past year which have fluctuated as inflation data offer uneven signs of improvement, but not enough to suggest that restrictive monetary policy will lift any time soon.
In August, 3 of 10 index components are up, 5 are down, and 2 are unchanged. Two index components have big moves, while most showed normal smaller month-to-month changes.
Expectations for the economy to improve are down 7 points to minus 37 percent in July, although the reading is not as deeply negative as in the first half of 2023. 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 the earnings trend is up 5 points to minus 25 percent in August. This is not much different from the readings over the past year which have fluctuated as inflation data offer uneven signs of improvement, but not enough to suggest that restrictive monetary policy will lift any time soon.
Market Consensus Before Announcement
The small business optimism index has been below the historical average of 98 for 18 months in a row. August's consensus is 91.7 versus 91.9 in July.
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.
