Small companies ramped up value hikes in November at a historic tempo, elevating questions on the knowledge of the Federal Reserve’s looming interest fee cut.
The web p.c of small enterprise house owners elevating common promoting costs surged by 13 proportion factors to 34%, the highest since March 2023, in response to a survey launched Tuesday by the National Federation of Independent Business.
The NFIB mentioned it’s the largest month-to-month enhance in the survey’s historical past. The month-to-month model of the survey launched in 1986.
Just 8% of small companies reported reducing common promoting costs, down from 12% in October. By distinction, 39% reported mountaineering costs, up from 31% in October.
“Price increases remain well above the monthly average…suggesting continued inflationary pressure,” the NFIB survey mentioned.
Even as total small enterprise optimism ticked greater in November, the survey discovered that 15% of small enterprise house owners say inflation is their No. 1 drawback in working their enterprise, up from 12% in October.
Peter Boockvar, chief funding officer at One Point NFG Wealth Partners, wrote on Substack that the value hike findings “stick out like a sore thumb” forward of the broadly anticipated fee cut from the Fed.
“If this was the only data point they looked at, they’d be hiking tomorrow [Wednesday] not cutting,” Boockvar mentioned.
Yet the Fed is reducing rates to shore up the shaky job market. Small companies slashed 120,000 jobs in November, in response to estimates from ADP. Small companies have been experiencing significant financial pressure from tariffs, excessive prices and comparatively excessive borrowing prices.