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U.S. Small-Business Optimism Dropped Amid Virus Spikes in July

Optimism in small U.S. businesses has now dropped.

U.S. Small-Business Optimism Dropped Amid Virus Spikes in July
A pedestrian wearing a protective mask walks past a closing store in San Francisco, U.S. (Photographer: Christopher Dilts/Bloomberg)

U.S. small-business optimism fell in July by more than forecast as spikes in virus cases around the country tempered hopes for a swift economic recovery, the National Federation of Independent Business said Tuesday.

The group’s index of sentiment decreased by 1.8 points to 98.8, reversing course after two months of gains. The measure remains well below the pre-pandemic 2020 high of 104.5. The median forecast in a Bloomberg survey of economists called for a reading of 100.5. The NFIB’s measure of sales expectations in the next three months fell 8 points in July to a net 5%.

Some states paused or rolled back their reopenings during the month as the virus continued to rage around the U.S. While the unemployment rate fell in July, small businesses continued to be disproportionately hit by the virus. Yelp Inc. reported in July that more than half of the business closures that were temporary at the beginning of the pandemic are now permanent.

“This summer has been challenging for many small-business owners who are working hard to keep their doors open and remain in business,” Bill Dunkelberg, NFIB chief economist, said in a statement. “There is still plenty of work to be done to get businesses back to pre-crisis numbers.”

Five of the 10 subindexes in the small-business optimism index lost ground in July, and the group’s uncertainty index increased 7 points to 88. An index of those firms expecting better business conditions in the next six months dropped 14 points to a net 25%.

©2020 Bloomberg L.P.