A man checks the label on a jar of vitamins at a Costco wholesale store on April 3, 2024 in Colchester, Vermont.
Robert Nickelsberg | Getty Images
Small business confidence hit its lowest level in more than 11 years in March as owners feared inflation was still a major problem.
At a time when other data suggests inflation is falling, the National Federation of Independent Business reported Tuesday that its survey showed a reading of 88.5, nearly a point lower than in February and the lowest level since December 2012 .
A quarter of all respondents said rising costs were the biggest problem.
“Small business optimism has reached its lowest level since 2012 as owners continue to contend with numerous economic headwinds,” said NFIB Chief Economist Bill Dunkelberg. “Inflation has again been reported as the top business concern on Main Street and the job market has eased only slightly.”
A quarter of all respondents cited inflation, and in particular higher production and labor costs, as their most pressing problem. According to seasonally adjusted data, a net 28% reported an increase in average selling prices for the month and 33% planned additional price increases.
As part of these rising costs, a net 38% said they had increased compensation, up 3 percentage points from February’s figure, which was the lowest since May 2021. The Labor Department reported Friday that average hourly wages rose 0.3% and 4.1% in March. from a year ago.
The survey includes other indicators that show that inflation, while not eradicated, is at least falling.
A Commerce Department measure of consumer spending prices showed the annual inflation rate was 2.5% in February. The measure, which the Federal Reserve uses as its main measure of inflation, showed a level of 2.8% when excluding food and energy, which policymakers prefer as a better sign of longer-term trends.
The consumer price index, a more closely watched number by the public, will be released on Wednesday and is expected to show a headline rate of 3.4% and a core rate of 3.7%. Fed policymakers are targeting 2% annual inflation.
Inflation expectations have been fairly well anchored in recent months. A survey by the New York Fed on Monday showed that respondents in March expected a key interest rate of 3% next year, unchanged from February. The three-year outlook rose slightly, but the five-year expectation fell.
However, the survey found a big jump in expectations for rent increases – up 8.7% next year, up 2.6 percentage points from February. The drop in protective inflation is at the heart of the Fed’s thesis that inflation will continue to fall toward the central bank’s 2 percent target, allowing for rate cuts later in the year.
Fed survey respondents also said they expect prices for most other major components to rise significantly. They expect gas prices to rise 4.5% and food prices to rise 5.1% next year, both 0.2 percentage points higher than in the February survey.
Don’t miss these stories from CNBC PRO:
Source link
2024-04-09 14:15:10
www.cnbc.com
