Amid continuing uncertainty, business owners continued to report concerns about sales and growth prospects. However, they reported that their views have improved somewhat since May. Business Confidence Confirmed by July Data.
Finding quality workers remained the top concern of small businesses. Rising costs and price pressures ranked second, but were noticeably less elevated than a year ago. Business Confidence Confirmed by July Data.
Business Confidence
Business confidence is an important indicator of economic activity. It reflects the expectations of firms based on opinion surveys about developments in production activities, orders and stocks of finished goods in the sector. It helps track and anticipate possible turning points in economic expansion or contraction.
Moreover, higher business confidence is one of the main drivers of aggregate demand. Increased confidence improves household income and employment prospects, which encourages households to spend more on consumption expenditure. This leads to stronger economic growth and increased investment by businesses.
As a result, this makes it important to understand what influences business confidence. Previous studies have generally concentrated on macroeconomic and political factors. For instance, Konstantinou and Tagkalakis find that expansionary fiscal policies boost business confidence, while increases in wages or government investment have a negative impact on it. Similarly, they find that the uncertainty about the future direction of economic policy has a significant adverse effect on business confidence in OECD countries.
Employment
After a strong start to the year, the hiring pace in the United States has lost some of its momentum. The pace of job gains has decelerated and wages have risen at a modest rate.
During the current Beige Book period, business activity declined slightly as contacts detailed more cautious spending habits by consumers and reported that high interest rates were continuing to constrain households’ big-ticket purchases and businesses’ project plans. Moreover, a number of firms noted that a shortage of skilled workers was weighing on their activity.
Still, contacts appeared to become more optimistic about the near-term outlook and less concerned that a recession in the United States was imminent. Consequently, the overall expectations index edged up.
Sales
The pace of business activity in the First District moderated during July. Retail contacts reported that sales were down somewhat from the recent highs, while tourism and hospitality activity was steady but less robust than in previous months.
Manufacturers continued to report modest growth in new orders and sales, and reported working through solid backlogs. However, a few businesses noted that higher interest rates were holding back households from making big-ticket purchases needs read more hear.
