NFIB Small Business Survey: Optimism Sustained in January

The latest issue of the NFIB Small Business Economic Trends came out this morning. The headline number for January came in at 105.9, up 0.1 from the previous month's 105.8, and its highest since December 2004. The index is at the 99th percentile in this series. Today's number came in above the Investing.com forecast of 105.1.

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

Small business optimism rose again in January to its highest level since December 2004, suggesting that the post-election surge has staying power, according to the monthly National Federation of Independent Business (NFIB) Index of Small Business Optimism, released today.

“The stunning climb in optimism after the election was significantly improved in December and confirmed in January,” said NFIB President and CEO Juanita Duggan. “Small business owners like what they see so far from Washington.”

The Index reached 105.9 in January, an increase of 0.1 points. The uptick follows the largest month-over-month increase in the survey’s history. Five of the Index components increased and five decreased, but many held near their record high.

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.

NFIB Optimism Index

Here is a closer look at the indicator since the turn of the century. We are now at a post-recession interim high with 105.9.

NFIB Optimism Index Since 2000

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.

NFIB Optimism Index Moving Average