US small business confidence edges past forecasts in September, NFIB says

Small business confidence in the US edged higher last month as expectations for sales improved on the back of falling gas prices, the results of a closely followed survey revealed.

The National Federation of Independent Business's small business activity index improved from a reading of 91.8 for August to 92.1 in September.

Economists had penciled in a reading of 91.6.

Buoying the headline index was a nine point jump in a sub-index linked to sales expectations.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, attributed the improvement to the reversal in petrol prices since mid-June.

Nonetheless, Shepherdson expected the headline index to stage a clear drop across the last quarter of 2022, as it tended to track stock market prices with a lag.

Although it was already released during the prior week, as is customary, the subindex for hiring intentions had remained "strong", pointing towards private payroll growth of approximately 300,000 per month.

The number of companies reporting "hard-to-fill" positions however dipped to a 15-month low.

"This is consistent with the dip in both expected and current compensation costs, which now point clearly to slowing wage inflation next year," he added.

Shepherdson also noted "increasingly widespread" reports of companies carrying too much inventory with just 1% now saying they had "too little inventory" - the least since July 2020.

Hence, he also expected selling prices to soften.