(Bloomberg) — The level of optimism among small businesses in the US dropped to its lowest in four months in September, reflecting increasingly negative expectations for the economy and credit conditions.Thank you for reading this post, don't forget to subscribe!
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The sentiment index of the National Federation of Independent Business fell to 90.8 last month, a decrease of half a point, according to the group’s announcement on Tuesday. A net 43% of small-business owners anticipate a decline in business conditions over the next six months, the highest level since May.
Furthermore, smaller companies are growing more pessimistic about the availability of credit. The percentage of survey participants who reported that getting a loan was more difficult compared to three months ago, increased to 8% – the highest level since March, when Silicon Valley Bank collapsed.
In response to persistent inflation, the Federal Reserve has raised interest rates to the highest level since the early 2000s. Authorities have consistently emphasized the necessity of keeping borrowing costs high for an extended period of time, which has led to a recent downturn in the bond market.
Here are the loan terms and conditions as stated by small businesses:
Exactly one out of every 10 companies anticipate a worsening of their debt situation in the next three months, the highest percentage since 2012.
A net quarter of borrowers reported they now pay higher interest rates compared to three months ago, the highest percentage since 2006.
The average interest rate for short-term loans paid by small-business owners stands at 9.8%, the highest since data was recorded in 2013.
The most significant challenges highlighted by NFIB survey respondents continue to be inflation and labor quality. The percentage of small businesses reporting an increase in sales value rose for the second consecutive month in September, marking the first back-to-back increase since the beginning of 2022.
“Owners remain pessimistic about future business conditions, which has contributed to their low optimism regarding the economy,” said Bill Dunkelberg, NFIB chief economist. “Fundamentals are being squeezed, leaving owners with few options but to increase selling prices to seek financial relief.”
The presence of hiring conflicts was also quite evident. Firms reporting job vacancies that were difficult to fill increased by 43%, the highest percentage since the start of the year. The number of people who indicated having few or no qualified applicants for job openings rose to 57%, the highest in a year.
(Adds graphic, tout, to survey)
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