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The
National Federation of Independent Business monthly sentiment
index fell by 2 points, the largest decrease since December
2022, to 89.9 in January from 91.9 in December. The drop follows
what had been the index's first increase in five months in
December, and keeps it below its 50-year average of 98 for a
25th-straight month.
Labor quality and inflation were both a top concern for business
owners in January. As costs increase, sales conditions have
tightened with the share of owners reporting profit growth
falling to a net negative 30% from a net negative 25% in
December, the report said.
“Small business owners continue to make appropriate business
adjustments in response to the ongoing economic challenges
they’re facing,” said the NFIB’s chief economist Bill
Dunkelberg. “In January, optimism among small business owners
dropped as inflation remains a key obstacle on Main Street.”
Nonetheless, the share of owners citing inflation as their top
concern dropped 3 points to 20%, the report said. Concerns
around rates of interest and tightened credit conditions for
small business borrowers have tracked with the Federal Reserve’s
rate hike campaign, launched in 2022 in an effort to curb
inflation. The Fed, though, has signaled rate hikes are over and
it should be in position to lower rates later this year.
On a six-month basis, the portion of owners expecting better
business conditions fell 2 points to negative 38%. The share of
owners who expect higher real sales fell 12 points to negative
16% in January.
(Reporting by Amina Niasse; Editing by Andrea Ricci)
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