Dun & Bradstreet U.S. Economic Health Tracker

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A Monthly Report on Business-Related Economic Trends

December 2021 Report

Dun & Bradstreet's U.S. Economic Health Tracker is a monthly, multi-dimensional review of the health of the economy.

U.S. Small Business Health Index

The Small Business Health Index (SBHI) measures business health at the Metropolitan Statistical Area (MSA) and Industry (SIC) level as it relates to payment patterns, failure rates, and credit use. The SBHI follows a sampling of all active small businesses with fewer than 100 employees and combines pro- and counter-cyclical elements to provide a simple, representative number. Using 2004 as the base year (index value 100), improvement is designated by an index value above 100. The index is a combination of pro-cyclical and counter-cyclical elements - reflected in one number and is calculated quarterly. The SBHI is based on 4 factors:

  • Average credit card utilization
  • Percent of credit cards with outstanding balance cycle 3+ (61+ days past due)
  • Ratio derived from the number of failures in the last 12 months over prior 12 months
  • Percent of delinquent dollars 91+ days past due out of all outstanding balances

The U.S. Small Business Health Index (SBHI) improved slightly in October, rising 0.2 pp. to 88.2, settling near the average level from the prior three months. The index has remained mostly stable around the current level, ranging from 88.0-89.0 since June. This is a marked improvement in small business health since the depths of last year’s pandemic, but the index remains below pervious highs recorded during the Spring of 2019 and during the Fall of 2016. Slightly higher card delinquency rates over 61 days past due and slightly higher percentage of trade dollars over 91 days past due have held back the index since that time. 

U.S. Jobs Health

U.S Jobs Health is comprised of Dun & Bradstreet’s proprietary indicators that forecast that the labor market, based on nonfarm payroll employment figures. It combines Small Business Health Index industry data with U.S. Bureau of Labor Statistics figures to forecast monthly nonfarm payroll employment.

Dun & Bradstreet predicts 517,000 jobs were added to the nonfarm payroll in November, continuing from the previous month’s strong momentum. Payroll gains will be supported from still improving initial jobless claims figures which remained below 300,000 for eight consecutive weeks. At the sectoral level job gains are mostly equally distributed amongst our standard industry cuts with momentum in m/m job gains remaining mostly stronger than just a few months ago. 

U.S. Overall Business Health Index

The U.S. Overall Business Health Index provides a weighted average of the D&B Viability Rating®, the D&B® Delinquency Predictor Score, and the D&B® Total Loss Predictor. The Overall Business Health Index (OBHI) measures the aggregate risk of a confirmed active and open businesses paying in a severely delinquent manner (91+ DPD), recording a first payment default or becoming no longer active. The index tracks conditions at both the geographic (National, census region, state and Metro Statistical Area) and industry level (SIC). The index provides a benchmark for determining business level financial stress. It ranges from zero (with all businesses recording high levels of risk) to 100% (with all businesses recording low levels of risk).

The mid-summer peak and turn lower in the Overall Business Health Index, continued in October with the index falling 0.3% to a 13-month low. The index, which is a broad indicator of Dun & Bradstreet’s standard risk scores, has recorded declines in all three of its subcomponents in recent months indicating a broad-based rise in risk of all active and open businesses in the US. On a national basis, the largest declines have most recently been within the Commercial Credit Score category, meaning that businesses are shifting toward a higher severely delinquency risk.          

 

Perspectives

The recent range bound nature of the Small Business Health Index, that’s been in place since this past summer, indicates that GDP growth has likely plateaued in the US and will likely grow at a slower pace in the near-term compared to the more recent rapid rate of recovery. Stages of the economy, which can range from boom to bust to recovery can vary and the US appears to be entering a more mature phase of the recovery in which small businesses health according to Dun & Bradstreet’s Data Cloud indicates the economy has reached a ‘Goldilocks’ stage of ‘not to hot and not too cold’.  The US recovery remains intact and gains in the labor market foretell that the healing is still underway but expectations for the future pace of growth are clearly shifting.  

Meanwhile, this month’s decline in Dun & Bradstreet’s Overall Business Health Index (OBHI) builds upon the earlier mid-summer trend of rising risk and a declining index. Since peaking in Mid-July the index has undergone a slow reversal from last year’s improvement. The unwind of the index’s gains are distributed fairly evenly among all of our standard industries and among all geographies with some segments declining at a faster pace than others. Our risk index appears to have peaked with a coinciding top in some forms of US business activity and sentiment. The US economy appears to be entering a phase of plateauing growth and rising risk.  

Report based on data available as of December 2, 2021.