The National Federation of Independent Business (NFIB) index rose to 91.9 in December from November’s reading of 90.6, Reuters reports.
It was the first increase since July and matched that month’s reading, but it was the 24th consecutive month the index remained below the 50-year average of 98. However, hiring costs and lingering concerns about inflation continue to undermine business owners’ confidence.
The conditions followed the Fed’s most aggressive rate hike campaign since the 1980s, which began in 2022, with small business owners describing tighter credit conditions.
In December, 25% of businesses reported an increase in profits, up 7 points from a month earlier, with labour costs continuing to weigh on earnings, according to a report released Tuesday.
Inflation was the top concern for owners, and the percentage of owners reporting inflation as their top concern rose to a seasonally adjusted 23%. The jump followed an unexpected 0.1% rise in U.S. consumer prices in November, data from the Bureau of Labour Statistics showed.
On a 12-month basis, prices rose 3.1% in November, helped in part by higher prices for cars and trucks, the BLS data said. Uncertainty about future economic conditions also weakened the business outlook, the NFIB report said.
The number of business owners citing labour quality as their top concern fell four points to 20%, while labour costs rose slightly. The number of owners expecting business conditions to improve within six months rose six points to 36% in December.
