Small Business Confidence Surges
The just-released Wall Street Journal/Vistage small business confidence index posted big gains in June.
Good Morning!
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THE ECONOMY
Small business confidence has rebounded in June: “With the 90-day pause on tariffs delaying impacts until next month, small business confidence rebounded in June with a nearly 8-point increase over May. While this is a notable month-over-month increase, it is still not a complete recovery from the fall in confidence in April due to the initial tariff announcements. The WSJ/Vistage Small Business CEO Confidence Index rose to 82.9 in June, driven by improvements in all forward-looking components.”
“There is no doubt that economic pessimism is connected to tariff uncertainty. The sharp decline in small business confidence in April in response to the tariff announcements has rebounded slightly over the last 2 months. However, that uptick in confidence does not mean the impacts of tariffs have been mitigated. Nearly two-thirds of small business leaders report negative impacts of changing tariff and trade policies, whether direct (27 percent) or indirect (38 percent).”
“Of the 51 percent of small businesses that carry inventory, half report that inventory levels have not changed compared to prior years, indicating they are holding steady while evaluating the future. Additionally, the proportion of small businesses carrying higher and lower inventory levels sits at 19 percent and 18 percent respectively. Increasing inventory to avoid the pending costs of tariffs is a strategy some businesses are willing to take. As one respondent shares, ‘Our inventory is nearly 40 percent higher than a year ago due to a strategic inventory build to delay tariff impacts but also due to a decrease in sales that has led to a slower inventory turn.’”
“While just over a third (34 percent) of small business leaders plan to increase fixed investments in the year ahead, 17 percent expect to decrease fixed investments. When it comes to capital expenditures, over a quarter of small business leaders (26 percent) report that they now plan to decrease capital expenditures compared to the plans at the beginning of the year.”
“Over 4 in 10 (43 percent) of small businesses expect profitability to improve in the next year, an incremental improvement from last month, while 23 percent expect declines in profitability, an 8-point improvement.” READ MORE
