U.S. small-business optimism dipped in June, remains near high

Written on Jul 20, 2017

A gauge of U.S. small-business confidence fell in June as business owners expressed frustration over gridlock in Washington, according to a National Federation of Independent Business (NFIB) report released July 11.

The group's Index of Small Business Optimism fell to 103.6 last month from 104.5 in May, although it remains near its highest level in more than a decade. The index surged following the election of Donald Trump as U.S. president, and in January hit its highest level since December 2004.

The rise was largely attributed to business owners' optimism surrounding Trump's promises of deregulation, tax breaks and infrastructure spending.

But Congress' inability to deliver on those promises has muted confidence as business operators grow wary of political infighting over the health-care reform legislation, and prospects for tax reform are uncertain.

With fewer small businesses anticipating improved business conditions, plans to increase employment have also declined, falling 3 percentage points in June to 15% of respondents. May's reading of 18% matched the highest level since 2006.

In addition, fewer small businesses expressed willingness to hire in June, according to an NFIB jobs report released last week in connection with the government's monthly non-farm payrolls report for June. Forty-four percent of owners said they were hiring or trying to hire in June, down 5 points from the previous month.

"Hiring activity remains strong by historical standards, but the drop in June was unmistakable," said Bill Dunkelberg, NFIB's chief economist. "Whether this is the start of a negative trend or a one-month blip is something we'll have to keep an eye on."

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