U.S. Small-Business Sentiment Takes a Hit in September
WASHINGTON, Oct 14 (Reuters) – A notable decline in U.S. small-business sentiment was observed in September, driven largely by apprehensions surrounding adverse operating conditions anticipated over the forthcoming six months.
Many proprietors reported either recent price hikes or forthcoming plans to increase prices, indicating an imminent rise in inflation rates.
The National Federation of Independent Business (NFIB) revealed on Tuesday that its Small Business Optimism Index decreased by 2.0 points, settling at 98.8 last month. This marks the first reduction in three months.
The ongoing governmental funding impasse, stemming from a political deadlock between Republican and Democratic factions in Washington, has impeded the collection and dissemination of official economic data.
Consequently, investors and policymakers are increasingly reliant on private surveys to gauge the economic landscape.
As the shutdown progresses into its third week on Wednesday, the highly anticipated employment report for September has been postponed.
However, consumer price data for September is set to be released next Friday, aiding the Social Security Administration in its annual cost-of-living adjustment for 2026, which will affect millions of retirees and other beneficiaries.
The NFIB also noted a significant surge in its Uncertainty Index, which climbed 7 points since August to reach 100, marking the fourth-highest figure in over 51 years.
“Uncertainty remains alarmingly high, with the (Trump) administration still contemplating numerous policy changes,” commented NFIB Chief Economist Bill Dunkelberg.
“While economic growth appears robust, it may be more influenced by AI-related investments rather than expenditures impacting Main Street businesses.”
Rising Costs Due to Tariffs
The proportion of owners anticipating improved business conditions over the next half-year plummeted by 11 points, now standing at 23%.
Survey participants expressed concerns over escalating costs, citing higher prices for beef, health insurance, and taxes, alongside potential clients opting to postpone or forgo repairs or improvements due to a lack of confidence in the overall economic climate.
Fourteen percent of business owners identified inflation as their foremost challenge, linked to rising input costs, a three-point increase from August.
Furthermore, the fraction of those raising average selling prices climbed by three points to 24%, with the NFIB highlighting that “price hikes exceed the monthly average of a net 13%.” Complaints regarding supply chain disruptions affecting their businesses also increased.
The tariff policies implemented during President Donald Trump’s administration—most notably the recent threat of 100% duties on Chinese imports—are likely exacerbating these price increases and supply chain challenges.
Approximately 31% of owners indicated plans to raise prices within the next three months, a five-point increase from August. Concurrently, more businesses reported dwindling sales, with the number expecting higher inflation-adjusted sales dipping by four points.
This has resulted in a concerning accumulation of unsold inventory, casting a shadow over the economy’s outlook.
“Robust consumption spending seems concentrated among the upper tier of the income distribution, while the stock market continues to achieve new heights, generating capital gains for investors,” noted Dunkelberg.
Source link: Kitco.com.
