According to a report published on Tuesday, U.S. small business sentiment reached its lowest point in January since May 2023. The National Federation of Independent Business monthly sentiment index fell to 89.9 from 91.9 in December, marking the largest decrease since December 2022. Despite this, the share of owners citing inflation as their top concern dropped by 3 points to 20%.
In January, labor quality and sales conditions were the top concerns for business owners. Sales conditions have tightened significantly, with the share of owners reporting profit growth falling to a net negative 30% from a net negative 25% in December. As a result, small business owners are making adjustments to respond to the economic challenges they are facing.
Looking ahead, the portion of owners expecting better business conditions in the next six months fell by two points to negative 38%. Additionally, the share of owners who expect higher real sales also decreased by twelve points to negative 16% in January. These statistics paint a sobering picture of the challenges faced by small business owners and highlight their need for support from policymakers and industry stakeholders alike.