NFIB Small Business Optimism – November 2015

The November NFIB Small Business Optimism report was released yesterday, December 8, 2015. The headline of the Small Business Economic Trends report is “Small Business Optimism Collapses In November After Three Stagnant Months.”

The Index of Small Business Optimism dropped 1.3 points in November to 94.8.

Here are some excerpts from that I find particularly notable (but don’t necessarily agree with):

“During this holiday season, small business owners are finding little to be hopeful or optimistic about including the economy in the New Year. This month’s Index continues to signal a lackluster economy and shows that the small business sector has no expansion energy whatsoever.

also:

INVENTORIES AND SALES

The net percent of all owners (seasonally adjusted) reporting higher nominal sales in the past 3 months compared to the prior 3 months improved 3 percentage points to a net negative 5 percent.This is an “improvement” only in an economy that is delivering a sub-par performance.Nine percent cited weak sales as their top business problem, down 3 points. Overall, the direction of these changes is positive, but they are insufficient to really change the picture. Expected real sales volumes posted a 5 point decline, falling to a seasonally adjusted net negative 1 percent of owners expecting gains, a long way down from the 20 percent reading in December 2014.

The net percent of owners reporting inventory increases was a net negative 3 percent (seasonally adjusted), down 1 point. The net percent of owners viewing current inventory stocks as “too low” lost 2 points, fall to a net negative 6 percent, as weak sales expectations made current stocks look excessive and future sales are not expected to grow much. The net percent of owners planning to add to inventory was unchanged at a net 0 percent, not much help for Q4 GDP growth.With weak expectations for sales and business conditions, prospects for strong inventory investment are poor.

also:

CREDIT MARKETS

Three percent of owners reported that all their borrowing needs were not satisfied, 1 point above the record low reached in September. Thirty-two percent reported all credit needs met (up 2 points), and 52 percent explicitly said they did not want a loan. Only 2 percent reported that financing was their top business problem. Twenty-seven percent of all owners reported borrowing on a regular basis, down 1 point. The average rate paid on short maturity loans fell 40 basis points to 4.7 percent. Loan demand remains historically weak, owners can’t find many good reasons to borrow to invest when expectations for growth are not very positive. The net percent of owners expecting credit conditions to ease in the coming months was a negative 4 percent, a 1 point improvement.

Here is a chart of the NFIB Small Business Optimism chart, as seen in the December 8 Doug Short post titled “NFIB:  Small Business Index Declined in November“:

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Further details regarding small business conditions can be seen in the full November 2015 NFIB Small Business Economic Trends (pdf) report.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 2063.59 as this post is written