| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Index | 92.4 | 92.0 to 92.9 | 89.9 | 91.9 |
Highlights
The NIFB small business optimism index is down 2.0 points to 89.9 in January after 91.9 in December and 90.3 in January 2023. This is below the consensus of 92.4 in the Econoday survey of forecasters and the lowest since 89.8 in December 2022. The report noted that the index is below the 50-year average of 98 for the 25th straight month. The uncertainty index is up to 73 in January after 71 in December, and below 76 in January 2023. If small businesses find the outlook a bit gloomier, they are also more certain about the near future.
In January, two of the 10 components are higher, six are lower, and two are unchanged. There is little change across components except for the 12 point drop in expectations for higher sales to minus 16 percent, and 5 point decline to minus 30 percent in the earnings trend.
Among NFIB survey respondents in January, 21 percent said their single most important problem is the quality of labor. This noses out inflation as the most important problem for 20 percent of respondents. However, the prevalence of these two problems which have changed places a few times in recent months has eased somewhat. The supply of labor and ability to hire workers with the right skills and/or experience has improved, and upward price pressures abated.
In January, two of the 10 components are higher, six are lower, and two are unchanged. There is little change across components except for the 12 point drop in expectations for higher sales to minus 16 percent, and 5 point decline to minus 30 percent in the earnings trend.
Among NFIB survey respondents in January, 21 percent said their single most important problem is the quality of labor. This noses out inflation as the most important problem for 20 percent of respondents. However, the prevalence of these two problems which have changed places a few times in recent months has eased somewhat. The supply of labor and ability to hire workers with the right skills and/or experience has improved, and upward price pressures abated.
Market Consensus Before Announcement
January's consensus is 92.4 versus 91.9 in December which, benefiting from gains in expectations, was the best reading since 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.
