Register to get unlimited Level 2

US small business sentiment index drops to lowest since 2016 elections

By Michele Maatouk

Date: Tuesday 12 Feb 2019

(Sharecast News) - Small business sentiment in the US deteriorated more than expected in January amid worries about the government shutdown and financial market instability, according to the National Federation of Independent Business.
The small business optimism index fell to 101.2 from 104.4 in December, missing expectations for a reading of 103.2. This marked the lowest level for the index since the weeks leading up to the 2016 elections and remains well below the historical average of 98.

"Business operations are still very strong, but small business owners' expectations about the future are shaky," said NFIB President and CEO Juanita D. Duggan.

"One thing small businesses make clear to us is their dislike for uncertainty, and while they are continuing to create jobs and increase compensation at a frenetic pace, the political climate is affecting how they view the future."

NFIB chief economist Bill Dunkelberg said that while January's index showed some positive developments among current business conditions, the return to divided government in Washington created an inability to agree on basic policy measures.

"This produced the longest partial government shutdown in history, elevating the level of uncertainty, which is damaging to economic activity," he said.

The NFIB's uncertainty index jumped seven points in January to 86, marking the fifth highest reading in the survey's 45-year history.

Pantheon Macroeconomics said: "The headline index was hit by further declines in the economic and business sales expectations indexes, which fell by 10 points and seven points respectively. These components are very sensitive to the stock market, with a lag, but they're now undershooting, perhaps because of the government shutdown. A clear rebound over the next couple of months is a good bet.

"Elsewhere, we're relieved to see a one-point increase in capex intentions, which fell three points in December. The number still points to a clear slowdown in the rate of growth of business capex but again we think it reasonable to expect a further pickup ahead. The key labour market numbers - hiring intentions and jobs-hard-to-fill both fell by a few points but this is not news; the data were released a couple of weeks ago ahead of the official payroll numbers, as usual. All the labour data continue to signal a very tight labour market, with the Jan declines likely nothing more than a knee-jerk reaction to the Q4 drop in stocks and the shutdown."

Special promo:
Trading the Forex Market? Visit FXmania.com to get advanced infomation about currencies and the Foreign Exchange Market.

..

Email this article to a friend

or share it with one of these popular networks:


Top of Page