July 11, 2017 / 10:22 AM / 9 days ago

U.S. small-business optimism dips in June, remains near high

2 Min Read

FILE PHOTO - A man prepares his store for business in downtown Los Angeles, California. U.S., July 5, 2017.Mike Blake

(Reuters) - A gauge of U.S. small-business confidence fell in June as business owners expressed frustration over gridlock in Washington, according to a National Federation of Independent Business report released on Tuesday.

The group’s Index of Small Business Optimism USOPIN=ECI fell to 103.6 last month from 104.5 in May, although it remains near its highest level in more than a decade. The index surged following the election of Donald Trump as U.S. president last November, and in January hit its highest level since December 2004.

The rise was largely attributed to business owners' optimism surrounding Trump’s promises of deregulation, tax breaks and infrastructure spending.

But Congress' inability to deliver on those promises has muted confidence as business operators grow wary of political infighting over the healthcare reform legislation, and prospects for tax reform are uncertain.

"As Washington fails to deliver on those two priorities small-business optimism is dropping," said Juanita Duggan, president of NFIB. "Gridlock is driving down small-business optimism, which will eventually drive down the economy."

With fewer small businesses anticipating improved business conditions, plans to increase employment have also declined, falling 3 percentage points in June to 15 percent of respondents. May's reading of 18 percent matched the highest level since 2006.

In addition, fewer small businesses expressed willingness to hire in June, according to an NFIB jobs report released last week in connection with the government's monthly non-farm payrolls report for June. Forty-four percent of owners said they were hiring or trying to hire in June, down 5 points from the previous month.

"Hiring activity remains strong by historical standards, but the drop in June was unmistakable," said Bill Dunkelberg, NFIB’s chief economist. "Whether this is the start of a negative trend or a one-month blip is something we’ll have to keep an eye on."

Editing by Dan Burns and Leslie Adler

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