| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Index | 89.9 | 89.3 to 90.6 | 89.4 | 89.9 |
Highlights
The NIFB small business optimism index is down half a point to 89.4 in February after 89.9 in January, and below 90.9 in February 2023. The February reading is slightly below the consensus of 89.9 in the Econoday survey of forecasters.
The February index reflects declines in 7 of 10 components, with increases in 2 components and no change in 1. The NFIB report said the index remains below the 50-year average of 98 for the 25th month in a row.
The components with the largest decrease are a 4 point decline to minus 7 percent for plans to increase inventories and 3 points to 5 percent for now is a good time to expand. The remaining components showed normal 1 or 2 point month-to-month changes.
Interestingly, the two components with increases are nearly sufficient to balance out the negatives. Expectations for higher sales rose 6 points to minus 10 percent while credit conditions rose 2 points to minus 6 percent. The reading for current inventory levels is unchanged.
Although on net the headline index is down in February, the underlying story suggests not much change from the prior month. The consistently unfavorable results may reflect greater unease at a time when risks to the economy look elevated, prospects of lower interest rates more remote, and in the face of a presidential election season in which the campaign rhetoric looks even more confrontational than it has been in recent years. The uncertainty index is up to 76 in February after 73 in January, and 71 in February 2023.
The February index reflects declines in 7 of 10 components, with increases in 2 components and no change in 1. The NFIB report said the index remains below the 50-year average of 98 for the 25th month in a row.
The components with the largest decrease are a 4 point decline to minus 7 percent for plans to increase inventories and 3 points to 5 percent for now is a good time to expand. The remaining components showed normal 1 or 2 point month-to-month changes.
Interestingly, the two components with increases are nearly sufficient to balance out the negatives. Expectations for higher sales rose 6 points to minus 10 percent while credit conditions rose 2 points to minus 6 percent. The reading for current inventory levels is unchanged.
Although on net the headline index is down in February, the underlying story suggests not much change from the prior month. The consistently unfavorable results may reflect greater unease at a time when risks to the economy look elevated, prospects of lower interest rates more remote, and in the face of a presidential election season in which the campaign rhetoric looks even more confrontational than it has been in recent years. The uncertainty index is up to 76 in February after 73 in January, and 71 in February 2023.
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. February's consensus is unchanged at January's 89.9.
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.
