US small business sentiment up, but labor, inflation worries persist
An independent barber waits for customers on his van in a local street in New York, U.S., Dec 25, 2023. REUTERS/Eduardo Munoz/File photo
NEW YORK – U.S. small business sentiment rose for the first time in five months in December, a survey published on Tuesday showed, but hiring costs and ongoing concerns around inflation continue to sour business owners’ confidence.
The National Federation of Independent Business (NFIB) index rose to 91.9 in December from November’s 90.6. It was the first increase since July and matched that month’s reading, but it held below its 50-year average of 98 for a 24th-straight month.
Conditions have tracked the Federal Reserve’s most aggressive rate hike campaign since the 1980s, launched in 2022, during which small business owners have described tightened credit conditions.
A net negative 25 percent of businesses reported improved profits in December, a 7 point increase from the month prior, with labor costs continuing to weigh on earnings, the report said.
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Inflation was the top problem for owners, and the share of owners reporting inflation as their main concern rose to a seasonally adjusted 235 percent . The jump comes after U.S. consumer prices unexpectedly rose 0.15 percent in November, Bureau of Labor Statistics data showed.
On a 12-month basis, prices in November edged up 3.15 percent driven in part by a resurgence in the prices of cars and trucks, the BLS data said. Uncertainty around future economic conditions has also eroded the business outlook, the NFIB report said.
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The share of business owners citing labor quality as their greatest concern fell four points to 205 percent , while labor costs rose slightly as an area of worry. The portion of owners expecting better business conditions on a six-month basis rose 6 points to a net negative 365 percent in December.
