Small Business Index Inches Up In January After Accelerating In November And December

In this article, I am going to discuss small business sentiment. This index is published monthly and contains both current numbers and in some cases a future outlook.

I use this index as a puzzle piece of my macro outlook. To confirm leading indicators and to see whether small businesses are participating in the growth rally. I don’t use this index as a leading index.

First, let me start by showing you the ISM manufacturing index. This index is a leading indicator. In other words, this indicator tells us what we can expect in terms of economic growth over the next 1-3 months.

The ISM index has hit 56 in January after accelerating since August/September of 2016. This should be visible when looking at the small business optimism index.

Small business optimism has hit a new multi-year high. The index increased from 105.8 in December to 105.9 in January. The current value is the highest number since 2004. Note the vertical acceleration after the election of President Trump.

Source: NFIB

Actual sales and sales expectations have done the same. Actual sales have accelerated from -7 in December to -2 in January. Sales expectations have exploded to pre-recession levels. we are currently looking at the steepest

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