The Market is More Confident! This U.S. Small Business Data Gives a Clearer Direction

<p>&nbsp;Small business confidence in the United States rose to an eight-month high in July, as concerns about inflation fell to their lowest level in nearly two years, according to a report released on Tuesday.</p><p><br /></p><p>The National Organization for Small Business (NFIB) reported that the Small Business Optimism Index rose by nine-tenths of a point to 91.1 last month, reaching its highest level since November 2022. The decline in inflation in July appeared to have a positive effect on small businesses, with only 21% saying that inflation was their biggest concern, the lowest reading since November 2021 and down 13 points from a year earlier.</p><p><br /></p><p>The continued improvement in confidence appears to be impacting investment in the workforce and capital investment plans. More than half of firms reported plans to invest in capital, and 17% reported plans to increase employment opportunities, both up by 2 percentage points from the previous month.</p><p><br /></p><p><br /></p><p>In addition, small businesses posted their most optimistic view of the near-term economic outlook since August 2021, with the NFIB general business conditions outlook index rising 10 points to -30. Small businesses in the United States have had a negative view of the business climate since December 2020, after former President Donald Trump lost his natural election.</p><p><br /></p><p>Declining consumer demand has undermined confidence in the ability to benefit from consistent price growth, and the number of firms planning to raise prices fell to a net 27%, the lowest reading since April.</p><p><br /></p><p>This is news welcomed by the Federal Reserve, whose 525 basis point interest rate hike also appears to be controlling credit demand for small businesses: 62% say they are not interested in getting a loan, up 2 percentage points from June, and 25% report all credit needs they were met, a decrease of 2 percentage points from the previous month.</p><p><br /></p><p>However, businesses did not significantly report that credit was getting harder to get, with 6% saying their last loan was no harder to get than before.</p>