US March NFIB survey shows slowdown continuing for small firms - ING

Rob Carnell, Chief International Economist at ING, notes that the US March NFIB survey needed to come in above 94.0 to arrest the down trend, but actually fell more than expected to 92.6 (92.9 Feb).

Key Quotes

“Small US firms are an important element in job creation in upswings, but the latest NFIB survey of small firms shows conditions continue to weaken, adding a further element of doubt to the resilience of the US growth story, and to prospects for further imminent rate hikes from the Federal Reserve Bank (Fed).

Recent labour market data in the US has painted a mixed picture - with jobs growth on the stronger side, but the unemployment rate ticking back up, and measures of broad labour market slack widening again. Non-labour market data has also been on the softer side, and the NFIB survey casts further doubt on how strong the US economy is right now, with "Nowcasts" of first quarter 2016 US GDP growth currently close to zero.

NFIB hiring plans were slightly lower in this latest survey, though capital spending did tick up a bit, despite falling sentiment on whether this was a good time to expand, and some growing sense that inventories were too high.

The NFIB survey is not a top tier release, but it adds weight to concern over current US growth momentum, and is reflected in the recent softness in US Treasury yields and dollar weakness. We anticipate that Fed speaker comments due over coming days will begin to reflect this mixed outlook with some of the hawks toning down their comments for the Fed to "get on with it", and an April rate hike looking a fairly distant prospect without a rapid and meaningful turnaround in the newsflow.”