NFIB Small Business Optimism – March 2015

The March NFIB Small Business Optimism report was released yesterday, April 14, 2015. The headline of the Small Business Economic Trends report is “In Rare Occurrence, All Ten Components Of NFIB Small Business Optimism Index Weakened.”

The Index of Small Business Optimism decreased 2.8 points in March to 95.2.

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


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 points, to a net negative 3 percent. Certainly consumer spending has not shown much energy in the past few months. Eleven percent cited weak sales as their top business problem, down 1 point. Expected real sales volumes posted a 2 point decline, falling to a net 13 percent of owners expecting gains, after a 5 point decline in January and February. Sales prospects are still looking reasonably good to owners, just not as hot as in the fourth quarter last year.

After 4 months of positive inventory investment, the pace of inventory investment reversed direction, with a net negative 4 percent of all owners reporting growth in inventories (seasonally adjusted). The net percent of owners viewing current inventory stocks as “too low” deteriorated 3 points to a net negative 5 percent, indicating that inventories are excessive when compared to expected sales volumes. The net percent of owners planning to add to inventory stocks fell 3 points to 1 percent, positive, but not a large force behind inventory investment in Q2.



Fifty-eight percent reported outlays, down 2 points.  Spending has not caught fire in spite of historically low interest rates. There is too much uncertainty and expected growth is too soft. Of those making expenditures, 40 percent reported spending on new equipment (down 3 points), 24 percent acquired vehicles (down 1 point), and 14 percent improved or expanded facilities (down 2 points). Eight percent acquired new buildings or land for expansion (unchanged) and 10 percent spent money for new fixtures and furniture (down 2 points). The percent of owners planning capital outlays in the next 3 to 6 months fell 2 points to 24 percent, not a strong reading historically. Of the 42 percent of owners who said it was a bad time to expand (down 1 point), 21 percent (down 2 points) still blamed the political environment.



Five percent of owners reported that all their credit needs were not met, up 2 points but historically low. Thirty-five percent reported all credit needs met, and 48 percent explicitly said they did not want a loan. For most of the recession, record numbers of firms have been on the “credit sidelines”, seeing no good reason to borrow. Only 3 percent reported that financing was their top business problem. Thirty-two percent of all owners reported borrowing on a regular basis, up 2 points. The average rate paid on short maturity loans rose 60 basis points to 5.7 percent. Loan demand remained historically weak. The net percent of owners expecting credit conditions to ease in the coming months was a negative 6 percent, a 2 point deterioration. Interest rates are low, but prospects for putting borrowed money profitably to work have not improved enough to induce owners to step up their borrowing and spending.

Here is a chart of the NFIB Small Business Optimism chart, as seen in the April 14 Doug Short post titled “Small Business Optimism:  A Nine-Month Low“ :

NFIB Small Business Optimism Index

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


The Special Note summarizes my overall thoughts about our economic situation

SPX at 2095.84 as this post is written