New data from financial services and payments provider Fiserv reveals that small business sales growth experienced a slowdown in June as consumers exhibited caution in their spending habits. This shift in consumer behavior can be attributed to various factors, including high prices on groceries and other essentials, as well as elevated interest rates impacting consumers' purchasing power.
The latest report from the Commerce Department indicates that sales for retailers of all sizes remained stagnant in June compared to May. The seasonally adjusted Fiserv Small Business Index, which assesses small business performance, declined to 140 in June from 144 in May. Month-over-month sales at small businesses saw a 2.9% decrease from May, with transactions also dropping by 1.5%. However, both sales and transactions showed improvement compared to the same period in 2023.
The decline in sales from May was primarily driven by a reduction in average ticket sizes, reflecting a trend of consumers becoming more budget-conscious amidst inflationary pressures. Fiserv noted that as the quarter concluded, consumers scaled back their spending and foot traffic across various sectors, including retail, restaurants, and service-based businesses.
While some of the decline may be attributed to short-term seasonal demand shifts, certain sectors experienced increased spending in June. Notable areas of growth included higher insurance premiums, increased summer foot traffic, and a rise in new subscription sign-ups for web-based content hosting platforms. However, consumer spending at small businesses decreased across multiple industries, such as retail, accommodations, restaurants, ambulatory health care, and professional services.
The Fiserv Small Business Index relies on point-of-sale transaction data encompassing card, cash, and check transactions both in-store and online from approximately 2 million small businesses across the United States.
