U.S. small business confidence dips in October: NFIB

Nov 8 (Reuters) – U.S. small business confidence edged down in October, a survey showed on Tuesday, as high inflation kept sentiment under pressure and more business owners forecast a worsening economic outlook.

The National Federation of Independent Business (NFIB) said its small business optimism index fell 0.8 point last month to 91.3, the lowest level since July. The pullback came after two straight months of gains, while the first half of the year deteriorated.

Thirty-three percent of owners reported inflation as the single most important issue in their business, up 3 percentage points from September and 4 points below the July reading, the highest percentage since the fourth quarter of 1979 .

The Fed has raised interest rates from near-zero levels at the start of the year to the current range of 3.75% to 4.00% in response to price pressures that have been near 40-year highs for months.

Inflation is also a hot spot for voters ahead of Tuesday’s midterm elections, which Democrats fear could cost them control of one or both houses of Congress to their Republican opponents.

Last week, Federal Reserve Chairman Jerome Powell hinted that the central bank wants to slow the pace of rate hikes as early as its next policy meeting on Dec. 12. 13-14, but it now expects rate hikes to last longer and ultimately to be higher than previously expected. By the Fed’s preferred measure, inflation remains more than three times its 2% target.

With inflation still stubbornly high and the full impact of the Fed’s tightening of credit yet to fully reverberate in the economy, the share of homeowners expecting business conditions to improve over the next six months fell 2 percentage points from September to negative 46% last month. The NFIB’s Uncertainty Index was unchanged in October from the previous month.

The survey also showed that 46% of owners reported that vacancies were difficult to fill last month, unchanged from September. Government data released last week showed a larger-than-expected 10.7 million job openings on the last day of September, suggesting demand for labor remains strong.

Reporting by Lindsay Dunsmuir, Editing by Andrea Ricci

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