US small business sentiment slumped in July as coronavirus cases climbed

US small business sentiment slumped in July as coronavirus cases climbed
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  • US small business optimism fell in July as new coronavirus cases spiked, according to a report released Tuesday by the National Federation of Independent Business.
  • The NFIB's small business sentiment index fell to 98.8 in July after increasing over the last two months. The median economist forecast was for a reading of 100.5, according to Bloomberg data.
  • "Small business represents nearly half of the GDP and this month we saw a dip in optimism," said Bill Dunkelberg, NFIB chief economist. "There is still plenty of work to be done to get businesses back to pre-crisis numbers."

US small business optimism reversed in July and fell as new coronavirus cases spiked, threatening to derail the economic recovery from the pandemic recession, according to a Tuesday report from the National Federation of Independent Business.

The NFIB's small business optimism index fell to 98.8 in July, missing the median economist estimate of 100.5, according to Bloomberg data. The slump in sentiment comes after two months of improvement at the strong start of the economic recovery.

"This summer has been challenging for many small business owners who are working hard to keep their doors open and remain in business," said NFIB's chief economist Bill Dunkelberg in a statement.
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"Small business represents nearly half of the GDP and this month we saw a dip in optimism," he said. "There is still plenty of work to be done to get businesses back to pre-crisis numbers."

In July, the recovery slowed as some states were forced to pause or roll back their reopening plans when new coronavirus cases spiked to record highs. While overall unemployment ticked down in the month, the pace of the recovery became more muted. In addition, businesses have taken a hit — Yelp data showed that more than half of all business closures due to the pandemic are permanent.

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Of the 1o subindexes included in the NFIB's small-business optimism index, five decreased in July. Real sales expectations for the next three months fell eight points to 5%, and the share of owners who think it's a good idea to expand fell two points to 11%. Earnings trends over the past three months improved slightly, but are still a net negative 32%, and job creation plans increased two points to net 18%.

Beyond small-business sentiment, the NFIB's uncertainty index increased seven points to 88 in July, while expectations of better business conditions in the next six months fell 14 points to 25%.
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