In December, US NFIB small business optimism improved for a fourth consecutive month. The headline index rose from 92.0 to 93.8, in line with expectations. The details show an increase in the number of firms reporting: plans to increase inventories (2% from 0%), expect better economy (-18% from -12%), expect higher sales (9% from 4%), inventory satisfaction (0% from -1%), easing of credit conditions (-9% from -10%), good time to expand (10% from 8%) and a significant rise firms seeing positive earnings trends (-22% from -28%). Plans to hire dropped slightly (from 7% to 6%) and so did positions not able to fill (15% from 16%). The balance of firms reporting higher selling prices (0%) and increased capital spending (24%) stayed unchanged from the previous months. While the trend in small business confidence is upward and remains encouraging, the index is still significantly below its long-term average (98.4). It will be interesting to see whether confidence among small businesses will improve further over the coming months as small business confidence failed to improve significantly in 2010 and early 2011, which was in sharp contrast with ISM’s and regional US business confidence indicators. A further significant improvement in small business confidence would be an encouraging sign that the recovery in the US is becoming more broad-based.