June US Small Business Confidence Falls…Inventory Builds Amid Persistent Uncertainty

Korea Economic Daily

Summary

"The US small business confidence index in June was reported to have fallen by 0.2 points to an optimism index of 98.6."
"It was noted that US small businesses are facing an increase in inventories and decreased sales growth expectations for the next three months."
"It was reported that trade uncertainty and policy impact have weakened economic expectations and perceptions of business soundness."

"Expectations for Increased Sales Over the Next 3 Months Also Declined"

With ongoing trade conflicts, small business confidence in the US declined in June. The decrease was attributed to continued trade uncertainty and a buildup in inventories.

According to Reuters on the 8th (local time), the National Federation of Independent Business (NFIB) announced that the Small Business Optimism Index registered 98.6 in June, a 0.2-point drop compared to May.

NFIB reported that nearly 1 in 8 companies said they had 'too much inventory' in June, almost double the figure for May. Additionally, the share of those expecting sales to increase over the next three months decreased from 10% in May to 7%.

Small businesses also reported a significant decline in perceptions regarding the soundness of their own business: 49% responded "good," and 8% responded "very good." These figures were down from 55% and 14%, respectively, in May. Meanwhile, the uncertainty index for this survey fell by 5 points to 89, marking the lowest level this year.

The main cause was analyzed as the high level of uncertainty surrounding President Donald Trump’s trade and economic policies.

Regarding the Tax and Spending Bill (OBBB) signed by President Trump last week, the Democratic Party pointed out that it would harm the working class with millions of dollars in health insurance cuts, and a bipartisan analysis organization projected that national debt would increase by $3 trillion (approximately ₩4,110 trillion).

The report stated that the percentage of respondents expecting economic conditions to improve fell to a net 22% in June from 25% in May.

Jung-Ah Kim, contributing reporter kja@hankyung.com