NFIB Small Business Survey: Index Slips Slightly in March, Optimism Sustained

The latest issue of the NFIB Small Business Economic Trends came out this morning. The headline number for March came in at 104.7, down 0.6 from the previous month's 105.3. The index is at the 97th percentile in this series. Today's number came in at the Investing.com forecast.

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

The remarkable surge in small business optimism that began in November of last year was sustained in March, according to the National Federation of Independent Business (NFIB) Small Business Economic Trends Report, released today.

“Small business owners remain optimistic about the future of the economy and the direction of consumer confidence,” said NFIB President and CEO Juanita Duggan. “We are encouraged by signs that optimism is translating into economic activity, such as capital investment and job creation.”

The Index slipped 0.6 points in March to 104.7, still a very strong reading. Actual earnings, capital expenditure plans, and job-creation plans posted gains in March. Sales expectations, which have been flying high for months, dropped by 8 points, a sign that the Optimism Index could be moderating after a strong run.

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 just below the post-recession interim high.

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