(Bloomberg) -- US small-business optimism declined in August by the most in more than two years as earnings tumbled and firms grew more downbeat about prospects for sales and the economy.
The National Federation of Independent Business optimism index dropped 2.5 points, the most since June 2022, to 91.2 last month. The decline erased nearly half the advance over the previous four months.
Eight of the 10 components that make up the index weakened, led by a 9-point slide in sales expectations. Some 37% of firms reported deteriorating earnings, the largest share since 2010, as elevated prices, interest rates and labor costs continue to take a toll.
Among those reporting lower profits, 31% blamed weaker sales and 17% said the decline was due to prices of materials. Labor costs were cited by another 13%. Nearly a quarter of business owners indicated inflation was their single most important problem, well above the 3% long-term average from 1986 to mid-2020, according to the report.
As a result, small companies dialed back hiring plans. A net 13% of owners said they plan to create jobs in the next three months, down 2 percentage points from the prior month.
The NFIB’s uncertainty index rose 2 points to the highest since October 2020.
Results of the NFIB survey were based on 590 respondents through Aug. 29.
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