Macro Flash Report
NFIB Small Business Optimism
Takeaway:
July’s increasing and better than expected NFIB Small Business Optimism index is a welcome sign for underlying business conditions, while the Uncertainty index is approaching its recent late-2020 (a typical development in election years).
Small Business Optimism & Uncertainty Index
In July, the NFIB Small Business Optimism index rose to 93.7, up from 91.5 in June and above market expectations of 91.7, reaching its highest level since February 2022. While this is an encouraging print, it also marks the 31st consecutive month of the index remaining below the historical average of 98. Of the 10 index components, 5 increased, 2 decreased, and 3 were unchanged.
The main driver of the improvement was the Expected Business Conditions increasing by 18 points, as Fed rate decisions and the upcoming election become clearer, we anticipate that this component should continue trending higher. However, in the meantime, inflation remains the top business problem, up four points from June, as wage pressures and rising input costs continue to plague operations. The Uncertainty index grew by 8 points to 90, the highest since November 2020, as these concerns as well as the upcoming election weigh heavy.
Other key findings from the NFIB survey include:
- Compensation: 33% of businesses raised compensation, down 5 points from June, the lowest since April
- Inventory Investment: 2% of owners plan to invest in inventory, a 4-point increase from June, marking the first positive outlook since October 2022.
- Sales Expectations: The net percentage expecting higher sales rose to a net -9%, the highest level of
- Price Increases: The net percentage of businesses raising prices fell by 5 points to 22%, with 24% planning price hikes, the lowest since April 2023.
- Job Openings: 38% of owners reported unfilled job openings, up 1 point from