U.S. small-business sentiment skids to half-year low
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[January 10, 2023] (Reuters)
- U.S. small-business confidence slid to a six-month low in December,
according to a survey on Tuesday, which also showed that inflation and
worker shortages remained major issues for firm owners.
The National Federation of Independent Business (NFIB) said its Small
Business Optimism Index fell 2.1 points to 89.8 last month - the lowest
since June - amid a decline in the share of owners who expected better
business conditions over the next six months.
It was the 12th straight month that the index was below the 49-year
average of 98. The net share of owners expecting better business
conditions over the next six months fell to -51% last month from -43% in
November. It was -61% as recently as June.
Thirty-two percent of owners reported that inflation was their single
most important problem, unchanged from November and 5 points lower than
July's reading, which was the highest since the fourth quarter of 1979.
On net, about 43% of owners reported raising average selling prices,
down 8 points from November and the lowest since May 2021.
Government data due on Thursday is expected to show consumer prices were
unchanged in December from the month before, with the annual increase in
inflation likely the smallest since October 2021, according to a Reuters
survey of economists.
While price pressures showed signs of easing as 2022 came to a close,
Federal Reserve officials have yet to signal they are convinced the
slowdown in inflation is anywhere near sufficient to allow them to stop
raising interest rates in the near term.
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A person works at a stall selling fruit
and vegetables in Manhattan, New York City, U.S., March 28, 2022.
REUTERS/Andrew Kelly
The Fed, in the most aggressive interest rate hikes since the 1980s,
last year raised its policy rate from near zero in March to a range
of 4.25% to 4.5% last month. The central bank is seen increasing it
by another quarter percentage point at its meeting on Jan. 31-Feb.
1, with an eye to pushing it above 5% before considering a pause.
A tight labor market remains a concern for the Fed and small
businesses.
Forty-one percent of owners reported job openings that were hard to
fill, down 3 points from November. The difficulty in filling open
positions was most acute in the transportation, manufacturing and
construction industries, the NFIB said.
"Overall, small business owners are not optimistic about 2023 as
sales and business conditions are expected to deteriorate," said
William Dunkelberg, NFIB chief economist. "Owners are managing
several economic uncertainties and persistent inflation and they
continue to make business and operational changes to compensate."
(Reporting by Dan Burns; Editing by Andrea Ricci)
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