Small Business Optimism Index Rises

The small business optimism index rose 0.1 points in July to 94.6, a minute gain but nevertheless a touch higher than expectations and the fourth monthly increase in a row after falling to a 2-year low in March. Four of the 10 components of the index increased, four declined and two were unchanged.

Expectations that the economy will improve led the gains again, rising 4 points as it did in May and June yet still remaining negative at minus 5, followed by plans to increase inventories, which rose 3 point to a neutral 0. On the employment side, plans to increase employment rose 1 point to 12 while job openings hard to fill fell 3 points to 26 but still retained the leading position as the strongest of the components. The second strongest, plans to increase capital outlays, also dropped 1 point to a still very solid 25. But business owners became even more pessimistic about earnings trends, with this component falling 1 point to a deeply negative 21.

Recent History Of This Indicator:
The small business optimism index isn't expected to show any initial impact from Brexit with forecasters calling for no change at a consensus 94.5. If there is weakness, economic expectations is a possible component at risk as are expansion plans. Job readings have been mostly positive in this report.