NFIB small business optimism edges higher in December

Wells Fargo Research Team Wells Fargo

Summary

Small Business Owners Are Battling Staffing Shortages and Rising Costs

The NFIB Small Business Optimism Index edged 0.5 points higher in December to 98.9. Seven of the index's ten components increased during the month, led by owners' expectations for earnings, economic conditions and staffing. Business owners are having an unusually tough time hiring the workers they need. Staffing concerns and inflation remain the most pressing issues among small business owners. Supply chains issues appear to have eased a bit, however. The proportion of business owners that said their current inventory was "too low" fell six points in December and the proportion of firms planning to increase inventories fell two points.

The NFIB survey likely did not pick up much of the impact from the latest surge in COVID and associated staffing difficulties that have arisen since. We expect the January data to fall back somewhat, reflecting the rising number of workers that have had to miss work due to COVID, requiring them to isolate themselves for a few days. Consumer engagement appears to be holding up relatively well, however, so any dip should be relatively short. That said, the net share of business owners expecting economic conditions to improve over the next six months remains exceptionally low at -35%, even though it edged three points higher in December.

Download the full report

Author

Wells Fargo Research Team

Wells Fargo

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.