Small business sentiment ebbs in August amid rising uncertainty ahead of presidential election
US SMALL-BUSINESS confidence fell in August, reversing the prior month’s jump amid growing uncertainty ahead of the Nov 5 presidential election and expectations of weak sales.
The National Federation of Independent Business (NFIB) said on Tuesday (Sep 10) its Small Business Optimism Index dropped 2.5 points to 91.2 last month. The index had surged in July to the highest reading since February 2022.
Small business owners tend to lean Republican and some economists had viewed the jump in sentiment as largely driven by politics and a stock market rally following then-democratic Party candidate President Joe Biden’s poor debate performance against Republican Party candidate Donald Trump.
Economists had anticipated a reversal after Biden dropped out of the White House race and handed the baton to Vice-president Kamala Harris. Trump and Harris are locked in a tight contest, and the stock market has been lacklustre.
The survey’s Uncertainty Index increased two points to 92, the highest since October 2020. The share of businesses expecting higher inflation-adjusted sales volumes in the next three months fell nine points to -18 per cent. “Clearly, ‘uncertainty’ has been on the rise,” said NFIB chief economist bill Dunkelberg. “And the stock market is expressing some unease ... and the election is just weeks away.”
Though business owners continued to worry about inflation, the share ticked down and fewer reported raising average selling prices.
But labour shortages remain a challenge for small businesses, even as job openings in the nation have declined, resulting in a rise in the share of owners planning to raise compensation in the next three months.
Forty per cent of all owners reported job openings they could not fill in August, up two points from July. Most of the unfilled positions were for skilled workers, and were concentrated in the transportation, construction and manufacturing sectors.
Job creation plans, however, continued to decline. That is in line with the slowdown in nonfarm payrolls gains.
The share of owners planning capital investment increased, with many of them buying new equipment, improving or expanding facilities. A very small minority reported that financing was their top business problem.
Forty per cent of all owners reported job openings they could not fill in August, up two points from July. Most of the unfilled positions were for skilled workers, and were concentrated in the transportation, construction and manufacturing sectors.