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Small Business Optimism Down Slightly
Economic Uncertainty in Next Six Months

Small Business Optimism Down Slightly

Though small business owners continue to be optimistic overall, their biggest challenge remains the availability of skilled workers.

For the fourth straight month, the Small Business Optimism Index overseen by the National Federation of Independent Business lost ground, though not much with only a drop of 0.4 points to register 104.4. All told, it adds up to a moderate pullback from the record high the index set in August 2018.

The latest decrease can be largely blamed on the percentage of business owners who expect improvement in the economy in the next six months. That component of the index fell six points month-to-month. According to Mark Vitner, senior economist for the Wells Fargo Economics Group, concerns about Wall Street's losses at the end of 2018 and continued rate hikes by the Federal Reserve are the chief causes for that.

The proportion of companies reporting higher sales over the last three months compared to four, five and six months ago dipped five points, dropping that score to its lowest mark since November 2017. Expectations for higher sales in the next three months were only off one point.

As far as prices go, the percentage of firms that did raise them over the past three months added one point, but those planning to raise them over the next three months trimmed four points off its score.

"While both series are near their cycle highs, they are not rising in a way that would suggest inflation expectations are rising materially and thus support the notion that the Fed has some flexibility in further normalizing interest rates," stated Vitner.

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July 17, 2019, 8:33 pm PDT

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