Small Businesses remain resilient amid rate uncertainty and signs of job market weakness
May 2025
- Index Value (Apr):45.2
- Previous Month:43.2
- MoM:+2.0
- YoY:-9.8 (May 2024 = 55.0)
Last month’s dip was short-lived as May’s economic figures remained strong, showcasing the continued resilience of the U.S. economy. Reduced tariffs, especially on China, eased market concerns amid ongoing trade talks. The unemployment rate remained steady at 4.2% and wages continued to rise. New business starts remained stable at 447K in May, close to the monthly average of 441K since July 2020, and still well above pre-pandemic levels.
Consumer sentiment and small business optimism increased after recent declines, though uncertainty still affects these surveys. Consumer sentiment was 98.8 in May, a 3-point increase over April, but 11% lower than a year ago. Inflation news was mixed: overall and food inflation saw slight upticks, while core inflation stayed flat and rent inflation dropped to its lowest since November 2021. The Fed’s cautious approach persists, but predictions of a rate cut in the coming months are growing as inflation remains relatively steady and potential signs of job market weakness emerge.
