A report released on Tuesday revealed that US small business sentiment reached its lowest point since May 2023 in January. The National Federation of Independent Business’ monthly sentiment index fell to 89.9 from 91.9 in December, the biggest drop since December 2022. Despite this, the index remained below the 50-year average of 98 for the 25th straight month.
In January, job quality and inflation were the top concerns for business owners. Sales conditions tightened as the share of owners reporting a rise in profits dropped to a net negative 30% from a net negative 25% in December. As a result, small business owners are adapting to meet the economic challenges they face.
Despite these challenges, there was a significant decrease in the share of owners citing inflation as their biggest concern, falling by 3 points to 20%. This coincides with the Federal Reserve’s campaign to raise interest rates in 2022 to curb inflation, although the Fed has since signaled that rate hikes are over and should be in a position to cut rates later this year.
Looking ahead, the share of owners who expect better business conditions in the next six months fell by 2 points to negative 38%. In addition, the share of owners who expect higher real sales fell by 12 points to negative