Econoday Economic Report: NFIB Small Business Optimism Index December 11, 2012

2012 Economic Calendar

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NFIB Small Business Optimism Index

Released On 12/11/2012 7:30:00 AM For Nov, 2012

	Prior	Consensus	Consensus Range	Actual
level	93.1	92.5	92.0 to 93.5	87.5

Highlights
The NFIB index fell a very sharp 5.6 points to 87.5, one of the lowest readings on record which the report attributes to "an overwhelmingly negative response" among small businesses to the outcome of the presidential election. Hurricane Sandy is not a factor, says the report which made comparisons by isolating states hit by the storm. The report attributes the pessimism to the fiscal cliff, the "promise" of higher health-care costs and the "endless onslaught" of new regulations. Nine of 10 factors declined in the month with sales expectations and earnings trends especially weak. The one factor that did improve is employment.

Market Consensus before announcement
The NFIB Small Business Optimism Index in October rose slightly to 93.1 but remained in "solidly pessimistic" and "recessionary territory," according to the National Federation of Independent Business. With the fiscal cliff looming at year-end, the report cited uncertainty over business conditions as a key issue for small businesses. Sales remain a problem and job creation is weak.

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 ten seasonally adjusted components based on questions on the following: 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 opening, expected credit conditions, now a good time to expand, and earnings trend. The baseline of 100 is for the average of the year 1986. A positive percentage change indicates improvement while a negative percentage change in the index suggests a decline in optimism. But the level indicates optimism relative to 1986—a moderately healthy year for economic growth with annual average GDP growth at 3.5 percent. Why Investors Care

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