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U.S. Small Business Offers Gloomier Outlook at Start of Year

By Joshua Kirby

 

Confidence among U.S. small businesses unexpectedly weakened in January as owners' income expectations took a turn for the worse amid still-high inflation.

The National Federation of Independent Business said Tuesday that its small-business optimism index declined to 89.9 from 91.9 in December, disappointing economists' hopes for an increase, according to a poll compiled by The Wall Street Journal. A reading of 50 marks the long-term average, below which the index has lagged for more than two years straight.

"Optimism among small business owners dropped as inflation remains a key obstacle on Main Street," said Bill Dunkelberg, chief economist at NFIB. Some 20% of owners said price increases were their single most important problem in operating their business, just behind the number reporting labor quality as their main concern. A net 22% said they had raised average selling prices.

"Small business owners continue to make appropriate business adjustments in response to the ongoing economic challenges they're facing," Dunkelberg said. Inflation is expected to have declined to 2.9% in January, with figures due to be released later Tuesday.

More businesses were meanwhile gloomy about their sales prospects ahead, according to NFIB's survey, with the net proportion of owners expecting volumes to increases declining more than 12 points.

 

Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby

 

(END) Dow Jones Newswires

February 13, 2024 06:22 ET (11:22 GMT)

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