NFIB index suffers unexpected decline in November

The National Federation of Independent Business said its small business optimism index fell short of expectations in November, as it ticked down from 96.1 to 94.8, compared with analysts’ forecast for a 96.4 reading.

However, while the headline index fell below its 42-year- average, the US economy was still “plodding” along according to the NFIB.

Six of the index’s ten components registered a decline, with the economy expectations and earnings expectations gauges both falling three points, while the sales expectations sub-index shed five points.

"With weak expectations for sales and business conditions, prospects for strong inventory investment are poor," the report said, indicating that inventories are expected to be a drag on fourth quarter GDP.

Not even the prospect of the Federal Reserve hiking interest rates for the first time in almost a decade when it meets on the 15-16 December seems to be enough to boost confidence among small businesses.

“Even though there is talk that the Fed will be raising rates this month, it will hardly signal that they are feeling more optimistic about the economy,” said NFIB chief economist Bill Dunkelberg.