Inflation still a worry for US small businesses as optimism dips

(Sharecast News) - Optimism among small businesses in the US unexpectedly declined last month, according to the National Federation of Independent Business (NFIB), with inflation still a concern for many firms despite the recent slowdown in price pressures over recent months. The closely watched NFIB Small Business Optimism Index fell to 89.4 last month, from 89.9 in January, missing analysts' forecasts for a pick-up to 90.7.

This was the 26th straight month below the 50-year average reading of 98.

According to the survey, 23% of small business owners said that inflation was their single most important business problem in operating their business in February, up from 20% the month before.

This replaced labour quality as the top of the list, which was the most important problem with 16% of owners, down five points on January and the lowest level since April 2020.

Meanwhile, a net -10% of owners said they expected sales to be higher in February, an improvement from a net -16% albeit still in negative territory.

"While inflation pressures have eased since peaking in 2021, small business owners are still managing the elevated costs of higher prices and interest rates," said the NFIB's chief economist Bill Dunkelberg. "The labour market has also eased slightly as small business owners are having an easier time attracting and retaining employees."