US small business confidence slips as inflation fears hit four-year high – Firstpost

US small business confidence declined in May as inflation concerns intensified, with more firms planning price increases and becoming cautious about hiring amid rising economic uncertainty.

The National Federation of Independent Business (NFIB) said its Small Business Optimism Index fell 0.6 points to 95.3 in May, moving further below its 52-year average of 98.0. The survey’s uncertainty index climbed three points to 91, remaining significantly above its historical average of 68.

According to NFIB, uncertainty around global economic conditions and higher commodity prices continued to weigh on business sentiment. Rising energy costs and supply chain pressures have added to concerns that inflation may remain elevated.

Inflation emerged as one of the biggest challenges for small businesses, ranking second only behind taxes. The survey showed that the share of business owners planning to raise prices over the next three months jumped seven points to 34 per cent — the highest level since July 2022.

Around 36 per cent of small business owners reported increasing prices in May, marking the highest reading since March 2023 and remaining well above the historical average.

The inflation concerns come ahead of US consumer price data, with economists expecting the Consumer Price Index (CPI) to rise 4.2 per cent year-on-year in May, compared with 3.8 per cent in April.

Small businesses also showed weaker confidence in the labour market despite steady job growth in the broader economy. The NFIB employment index slipped for the third consecutive month, easing to 100.3 in May from 100.4 in April.

The share of owners planning to create new jobs over the next three months fell four points to 9 per cent, the lowest level since May 2020 and below the historical average of 11 per cent.

The data suggests that while the US economy continues to add jobs, small businesses remain cautious as persistent inflation pressures, cost concerns and uncertainty weigh on expansion plans.