| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Index | 95.9 | 95.8 to 97.2 | 98.8 | 95.8 |
Highlights
The NFIB small business optimism index is up 3.0 points to 98.8 in May, above the consensus of 95.9 in the Econoday survey of forecasters. The May increase is the first after falling for four months in a row. The NIFB said the index is just above the 51-year average of 98. If small business optimism is improved a bit, the uncertainty index is up to 94 in May after 92 in April. It remains consistent with an unsettled outlook for the near future.
The increase in the index signals some relief on the part of small businesses, while the rise in uncertainty suggests that business sentiment could easily decline again depending on the news out of Washington, DC regarding changes in taxes. Policy regarding tariffs is uncertain and the impact of the budget bill currently under consideration is also a big unknown. Survey responses to the question of what their single-most important problem is are led by 18 percent naming taxes. Worries about inflation are down to 14 percent of respondents and quality of labor at 16 percent.
Seven of 10 index components are higher in May, two are lower, and one is unchanged. There are large increases of 11 points to 10 percent in expectations for higher sales, 10 points to 25 percent in expectations for the economy to improve, and 7 points to 1 percent in current inventories. Survey respondents appear to have responded to news of rollbacks in some of the most significant tariff increases.
The increase in the index signals some relief on the part of small businesses, while the rise in uncertainty suggests that business sentiment could easily decline again depending on the news out of Washington, DC regarding changes in taxes. Policy regarding tariffs is uncertain and the impact of the budget bill currently under consideration is also a big unknown. Survey responses to the question of what their single-most important problem is are led by 18 percent naming taxes. Worries about inflation are down to 14 percent of respondents and quality of labor at 16 percent.
Seven of 10 index components are higher in May, two are lower, and one is unchanged. There are large increases of 11 points to 10 percent in expectations for higher sales, 10 points to 25 percent in expectations for the economy to improve, and 7 points to 1 percent in current inventories. Survey respondents appear to have responded to news of rollbacks in some of the most significant tariff increases.
Market Consensus Before Announcement
The index is expected nearly unchanged at a gloomy 95.9 in May as the index steadies following months of declines on fallout from tariffs. The index was down 1.6 points to 95.8 in April.
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.
