| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Index | 90.6 | 90.5 to 91.0 | 91.9 | 90.6 |
Highlights
The NIFB small business optimism index is up 1.3 points to 91.9 in December for its highest reading since 91.9 in July. The December index is above the consensus of 90.6 in the Econoday survey of forecasters. The increase is due mainly to improvements in some of the forward-looking components with present conditions less positive.
In December, five out of 10 index components are up, four are down, and one is unchanged. The largest gains are 7 points to minus 25 percent for the earnings trend and 6 points to minus 36 percent in expectations for the economy to improve. Also increasing are a 4 point rise to minus 4 percent for expectations for higher sales and 3 points to minus 8 percent for credit conditions. Recent easing in financing costs and anticipation of Fed rate cuts are likely buoying the outlook.
However, for December there is an 8 point drop to 0 percent in perceptions that now is a good time to expand, and a 5 point decline in current inventory satisfaction to minus 5 percent. Small businesses remain cautious. Plans to increase employment are down 2 points to 16 percent and current job openings are flat to 40 percent. The NFIB uncertainty index is up 5 points to 71 in December after falling to 65 in November from 76 in October.
Among NFIB survey respondents, 23 percent reported that inflation is their single most important concern followed by 20 percent that found quality of labor as their most important problem.
In December, five out of 10 index components are up, four are down, and one is unchanged. The largest gains are 7 points to minus 25 percent for the earnings trend and 6 points to minus 36 percent in expectations for the economy to improve. Also increasing are a 4 point rise to minus 4 percent for expectations for higher sales and 3 points to minus 8 percent for credit conditions. Recent easing in financing costs and anticipation of Fed rate cuts are likely buoying the outlook.
However, for December there is an 8 point drop to 0 percent in perceptions that now is a good time to expand, and a 5 point decline in current inventory satisfaction to minus 5 percent. Small businesses remain cautious. Plans to increase employment are down 2 points to 16 percent and current job openings are flat to 40 percent. The NFIB uncertainty index is up 5 points to 71 in December after falling to 65 in November from 76 in October.
Among NFIB survey respondents, 23 percent reported that inflation is their single most important concern followed by 20 percent that found quality of labor as their most important problem.
Market Consensus Before Announcement
With nearly 50 years of data, the small business optimism index has been below the historical average of 98 since January 2022. December's consensus is no change at 90.6.
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.
