U.S. Small Business Sentiment Sees First Rise in Five Months, but Concerns Persist

The latest survey by the National Federation of Independent Business (NFIB) revealed that U.S. small business sentiment experienced a modest uptick in December, marking the first increase in five months. The index rose to 91.9 from November’s 90.6, although it remains below the 50-year average for the 24th consecutive month. While this uptick may indicate a slight improvement, small business owners continue to grapple with challenges such as hiring costs and persistent worries about inflation.

The report highlighted that a net negative 25% of businesses reported improved profits in December, with labor costs continuing to impact earnings. Inflation remains a top concern, with the share of owners citing it as their main worry rising to a seasonally adjusted 23%. This increase follows unexpected rises in U.S. consumer prices, driven in part by a resurgence in the prices of cars and trucks. Uncertainty surrounding future economic conditions has also contributed to a subdued business outlook.

Despite the slight improvement in sentiment, concerns about labor quality and costs persist. The share of business owners citing labor quality as their greatest concern fell slightly, while the portion of owners expecting better business conditions on a six-month basis saw a modest increase. The report’s findings reflect the complex landscape in which U.S. small businesses are operating, as they navigate various economic and operational challenges.

The modest increase in small business sentiment may offer a glimmer of hope, but the ongoing impact of factors such as inflation and labor costs underscores the continued resilience and adaptability required of small business owners in the current economic environment.