NFIB Small Business Survey: “Now Is A Good Time To Expand”

The latest issue of the NFIB Small Business Economic Trends came out this morning. The headline number for January came in at 106.9, up 2.0 from the previous month. The index is at the 99th percentile in this series. Today’s number came in above the Investing.com forecast of 106.2.

Here is an excerpt from the opening summary of the news release.

The Small Business Optimism Index jumped two points to 106.9 in January and set a record with the number of small business owners saying Now Is a Good Time to Expand, according to NFIB’s Small Business Economic Trends Survey, released today.

“Main Street is roaring,” said NFIB President and CEO Juanita Duggan. “Small business owners are not only reporting better profits, but they’re also ready to grow and expand. The record level of enthusiasm for expansion follows a year of record-breaking optimism among small businesses.”

The first chart below highlights the 1986 baseline level of 100 and includes some labels to help us visualize that dramatic change in small-business sentiment that accompanied the Great Financial Crisis. Compare, for example, the relative resilience of the index during the 2000-2003 collapse of the Tech Bubble with the far weaker readings following the Great Recession that ended in June 2009.

Here is a closer look at the indicator since the turn of the century. We are just below the post-recession high.

The average monthly change in this indicator is 1.3 points. To smooth out the noise of volatility, here is a 3-month moving average of the Optimism Index along with the monthly values, shown as dots.

Here are some excerpts from the report.

Labor Markets

Job creation was solid in the small-business sector as owners reported a seasonally adjusted average employment change per firm of 0.23 workers, a strong showing.

Inflation

How effective has the Fed’s monetary policy been in lifting inflation to it two percent target rate?