Trump's trade war is triggering a 'sharp slowdown' among American small businesses

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Trump's trade war is triggering a 'sharp slowdown' among American small businesses

FILE PHOTO: U.S. President Donald Trump stands in the Oval Office during a presentation of the Presidential Medal of Freedom to NBA Hall of Famer Jerry West at the White House in Washington, U.S., September 5, 2019. REUTERS/Joshua Roberts

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  • Data from the NFIB, America's largest small business association, showed that Main Street businesses are feeling the heat from Donald Trump's trade war with China.
  • Business optimism missed expectations, slipping 1.6 points to a five-month low of 103.1.
  • "Fewer owners said they expect better business conditions and real sales volumes in the coming months," NFIB said.
  • Uncertainty also grew in August, as Pantheon Macroeconomics said there had been a "downshift in business investment."
  • View Markets Insider's homepage for more stories.

America's small businesses are starting to feel the heat from Trump's trade war, as new data on Tuesday revealed that business optimism hit a five-month low in August.

Data from the National Federation of Independent Business (NFIB), a lobbying group, showed that business optimism among smaller businesses fell to 103.1 - a 1.6 point fall, signaling worries on Main Street.

Pantheon Macroeconomics said in an email that the main optimism figure was "dragged down by declines in expectations for the economy and business sales." Both measures fell significantly, by eight points and five points respectively, Pantheon said.

"These indexes are much more volatile than the other components of the headline index, and they are heavily influenced by the performance of the stock market. The imposition of new tariffs on imported Chinese consumer goods and the promise of increases in existing tariffs can't have helped, either," the economic research firm said.

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More positively, firms expressed greater willingness to invest in factories and equipment.

"The good news - relatively - is that cap-ex plans rose a point, though the trend remains weak and continues to signal a clear downshift in business investment through the end of this year and into early 2020," Pantheon added.

The NFIB said that "optimism slipped because fewer owners said they expect better business conditions and real sales volumes in the coming months."

The NFIB also added in its report that the uncertainty index rose four points in August, "suggesting that small business owners are reluctant to make major spending commitments."

NFIB

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