May shows a shift in spending patterns for small businesses
Small Business Sales Hold Steady in May
Small business sales saw a year-over-year increase in May, remaining flat compared to the previous month. According to the latest Fiserv Small Business Index for May 2024, small business sales grew by 4.3% year-over-year and 0.2% month-over-month. Additionally, foot traffic increased by 5.2% year-over-year but declined by 0.5% compared to April. The seasonally adjusted Fiserv Small Business Index for May held steady at 145, showing no change from the previous month.
Prasanna Dhore, chief data officer at Fiserv, noted that consumer spending continued to rise in May, with a focus on non-discretionary purchases. Growth in spending at grocery stores surpassed that at restaurants, indicating a shift in consumer behavior.
On a national level, small business retail spending remained flat, while transactions rose by 0.7% month-over-month. Food & beverage retailers experienced the most significant spending expansion at 2.1%, while other categories like clothing, sporting goods, and health/personal care also saw modest gains. However, categories like general merchandise, auto parts, building materials, and furniture experienced declines, suggesting a decrease in discretionary spending by consumers.
Specialty trade contractors saw a slowdown in year-over-year growth to 2.8% from 4.0% in April, with a slight increase in month-over-month sales. On the other hand, professional, scientific, and technical services saw a substantial 13.5% increase in sales year-over-year. Truck transportation led all service categories nationally, growing by 4.0% month-over-month.
Jennifer LaClair, head of merchant solutions at Fiserv, emphasized the importance of small businesses as a key indicator of the U.S. economy. She stated that the Fiserv Small Business Index provides valuable insights into consumer spending trends. While the latest index shows a healthy pace of spending, there has been a slight slowdown in growth compared to previous months.
