US small business sentiment has declined in June, driven by increased reports of excess inventory and ongoing trade tensions. The National Federation of Independent Business (NFIB) reported a 2-tenths-of-a-point drop in its Small Business Optimism Index to 98.6. The decline was largely attributed to firms feeling they have too much inventory on hand.
Nearly one in eight businesses surveyed reported having excess inventories, almost double the number from May. Additionally, the share of those expecting improved sales over the next three months dropped to a net 7%. However, the uncertainty index fell to 89, still high but at its lowest reading this year.
The decline in business confidence has been attributed to President Donald Trump’s trade and policy priorities, including tariffs on goods from Japan and South Korea. The NFIB report noted a partisan divide in sentiment, with Democrats expressing depression and Republicans jubilation. Despite this, the outlook for sales remains uncertain.
Taxes were identified as the top concern for small businesses, followed by labor quality issues. Inflation was ranked lower due to easing price pressures. The share of business owners planning compensation increases increased to 33%, but the net percentage expecting an increase over the next three months remained steady at 19%.
Source: https://www.reuters.com/business/us-small-business-sentiment-ticks-down-june-2025-07-08