The ongoing economic challenges faced by small-business owners were evident at the Third Man Pressing manufacturing facility in Detroit, where a worker removes a vinyl record from a press. In January, small-business optimism in the United States suffered its biggest drop in more than a year, due to deteriorating profits and diminishing sales expectations according to the National Federation of Independent Business.
The overall index fell 2 points to 89.9, the sharpest monthly slide since December 2022. The share of owners who expect higher real sales volumes slumped 12 percentage points, the most since mid-2022, from a month earlier. A greater share of small-business owners reported lower earnings over the last three months.
Bill Dunkelberg, Chief Economist of NFIB, observed that “Small-business owners continue to make appropriate business adjustments in response to the ongoing economic challenges they’re facing. A more positive view of the future economy and economic policy would help stimulate longer term investment spending, but currently, owners’ views about the future are not supportive and financing costs are very high.”
The share of owners planning to boost employment dropped to the lowest level since May 2020. Thirty-nine percent, the smallest share in three years, had job openings that they were unable to fill, with an overwhelming majority continuing to cite a lack of qualified candidates. While inflation is cooling and becoming slightly less of a concern among firms, a significant portion of owners still identified that as the single most important concern in managing their businesses.