Dun & Bradstreet’s Overall Business Health Index was essentially unchanged in January, remaining at 48.95, a level the index has remained near since last October. The recent lack of improvement in overall risk is being primarily driven by a lack of gain within the Viability and Commercial Credit sub-components. Additonally, macroeconomic factors are having outsized effects on risk in individual sectors. Rising commodity prices such as oil have kept our natural resources category as a top performer over the past few months while negatively impacting the transportation sector.
* February 2022 marks the latest comprehensive historical revision to the Overall Business Health Index with subsequent planned revisions occurring during February of each year.
An improvement within the Small Business Health Index (SBHI) in January is a positive development and will provide a stronger footing for U.S. small businesses to stand upon while the domestic impact from soon to be tighter monetary policy, ongoing supply chain issues and the effects from geopolitical events in Eastern Europe are likely to shape the US small business environment for months to come. With rising uncertainty it’s important to note that Small Business Health Index remains near a post-pandemic high. Small businesses are recently failing at a lower rate while both credit card and trade dollar severe delinquency rates continue to trend lower. The current level of 89.1 remains near a traditional level of solid economic output and for the time being should continue to indicate robust GDP growth but many variable factors do exist and that could change growth in the months ahead. The leading principles of our SBHI will continue to provide an outlook for GDP growth over the next several quarters and each month will provide insight into how impactful these ongoing events to that growth rate.
Meanwhile, the Overall Business Health Index (OBHI) continues to stabilize around the 48.9 level, an area where it has remained for the past several months. Despite the continued recovery in economic growth ‘balance sheet risk’ as measured by the OBHI among all active and open businesses in the US remains somewhat heightened compared to various points in 2021. The lack of earlier improvement in the index in 2021 when macroeconomic effects were deemed less severe or potentially impactful than now could be deemed a risk within itself. Broader macroeconomic effects resulting from rising inflation and soon to be tightened US monetary policy will surely become a more difficult challenge for US businesses to deal with. Meanwhile, ongoing geopolitical events will likely have a further destabilizing effect on domestic balance sheet health. While stabilization in D&B’s risk scores is a positive development the establishment of the recent current range in the OBHI, which is still historically weak, should be interpreted with caution.
Report based on data available as of February 28, 2022.