US small-business optimism edges lower, selling prices rise

The net share of owners reporting higher nominal sales in the past three months falls to a three-year low of minus 14 per cent. PHOTO: REUTERS

Published Tue, Sep 12, 2023 · 07:04 PM

US SMALL-BUSINESS optimism edged lower in August amid weaker sales and concerns about the economic outlook, while more companies increased prices.

The National Federation of Independent Business’ (NFIB) index decreased by 0.6 point to 91.3 last month, the group said on Tuesday (Sep 12). The net share of owners reporting higher nominal sales in the past three months fell to a three-year low of minus 14 per cent. Future sales expectations also worsened.

The net share of companies expecting the economy to improve fell 7 percentage points to minus 37 per cent.

The NFIB report also showed a net 27 per cent of owners raised selling prices, up from 25 per cent in July and the first increase in nine months. Some 23 per cent of owners cited inflation as their single most important problem – a slight pickup from the prior month.

Meanwhile, the share of US small businesses with unfilled positions dropped to the lowest level since February 2021. While fewer companies boosted compensation, 26 per cent indicated plans to raise compensation in the next three months, the largest share this year.

The portion of companies planning capital outlays fell to a four-month low, though more small-business owners reported that all of their credit needs were met.

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Initial claims for state unemployment benefits fell to 216,000 in the week ended Sep 2 from a revised 229,000 the week before, said the Labour Department.

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The US economy has shown signs of resiliency in recent months despite an aggressive campaign of interest rate hikes by the Federal Reserve to tackle high inflation.

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A reading above 50 indicates growth in the services industry, which accounts for more than two-thirds of the economy.

US services sector picked up in August, along with prices

The shortfall in goods and services trade grows to US$65 billion from a revised US$63.7 billion in the prior month, according to Commerce Department data.

US trade deficit widened by less than expected in July

New orders for factory goods fall by 2.1 per cent in July after rising by 2.3 per cent in June, the US government says.

US factory orders fall 2.1% in July

Since last November, the PMI has been stuck below the 50 threshold, which indicates contraction in manufacturing, the longest such stretch since the 2007-2009 Great Recession.

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“With small business owners’ views about future sales growth and business conditions discouraging, owners want to hire and make money now from strong consumer spending,” Bill Dunkelberg, NFIB’s chief economist, said in a statement. “Inflation and the worker shortage continue to be the biggest obstacles for Main Street.” BLOOMBERG

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