Wednesday, May 22, 2024

Small business optimism hit an 11-year low as inflation fears persist

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Brooklyn, New York – An owner of a service station fills out paperwork for selling a used car.
Image: Andrew Lichtenstein (Getty Images)

Small businesses in the U.S. are feeling less optimistic as they continue to deal with a slowdown in sales and inflationary pressures, the National Federation of Independent Businesses (NFIB) found.

According to the NFIB, the sector’s sentiment index decreased by nine-tenths to 88.5 in March, reaching its lowest level since December 2012. The decline in part means that business owners are still dealing with lingering woes tied to the covid-19 pandemic, which placed significant stress on small businesses.

Bill Dunkelberg, NFIB’s chief economist said “owners continue to manage economic headwinds.” He added that “inflation has once again been reported as the top business problem on Main Street and the labor market has only eased slightly.”

The March 2024 survey, conducted by NFIB’s Research Center, collects economic trends data of small businesses. Respondents are randomly selected from NFIB’s membership.

Sales in the small business sector fell eight points in March to a net negative of 18%, the report found. The decrease in sales was the main contributor to the decline in last month’s Index, it added.

A potential slowdown in economic activity coupled with inflation concerns has also prompted owners to pump the brakes on their plans to fill open positions, NFIB said in its monthly jobs report. Only about 11% of owners are making plans to create new jobs in the next three months. That’s down one point from February and the lowest level since May 2020, according to the report.

“Job openings on Main Street are now in line with the levels before the pandemic,” said NFIB’s Dunkelberg. “The small business labor market remains tight and owners continue to compete to retain and recruit employees.”

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