Small business confidence is calculated by taking positive forecasts and subtracting negative forecasts, this leaves a net number of forecasts whether being positive or negative. As long as the index remains positive, there is confidence throughout the market.
Small Business Confidence Index
Small business confidence has been slowly declining, however sentiment from small business owners has been very optimistic, until the prediction of the first quarter of 2019, In the fourth quarter of 2018, the small business confidence index was 28.
Expected Results V Actual Result 2018
The actual results (AR) that came back from the fourth quarter of 2018 was to the displeasure of small businesses as the AR was not near the level of small business. Revenue was less than 25% the expected value, profitability was barely a tenth of predicted results, cash flow went into the negatives for the quarter whilst capital investment saw no gain.
The AR from the forth quarter of 2018 are reflected in the expected results of the first quarter of 2019. Optimism in the small business sector plummeted, while there was relative decline before this, the drop in the first quarter of 2019 was unprecedented. The expected results of the first quarter of 2019 are the same as the AR of the fourth quarter of 2018, demonstrating the unexpected nature of the results and the consequent effect of the optimism of the small business sector. Once the results of the next quarter come in, we will be able to tell whether the increased pessimism is well placed.