However, sentiment has suffered toward the backend of the week thanks in part to US data. Thursday’s data was PPI, Retail Sales and the NFIB small business optimism index and these revealed some concerns which have weighed slightly on overall sentiment ahead of the weekend.
The biggest concern came from small businesses, who are getting more pessimistic about the economy.
The NFIB Small Business Optimism Index declined 1.6 points in April, to 95.8, its lowest since October 2024. 6 of the 10 index components decreased, with expected business conditions having the most negative contribution.Over the last 4 months, the index has fallen 9.3 points, the sharpest drop since the 2020 pandemic.
At the same time, the share of small firms expecting better business conditions 6 months from now has plummeted 37 percentage points, to 15%, the lowest since October 2024.
The mood remained sour after Friday’s release of the University Of Michigan Consumer Sentiment Preliminary Data, which showed the index dropped sharply to 50.8 in May 2025, down from 52.2 in April and much lower than the expected 53.4, based on early estimates. This is the fifth monthly drop in a row, the lowest since June 2022, and the second-lowest ever recorded.
Rising inflation worries and concerns about tariffs are hurting confidence. Both the current conditions index (57.6 vs 59.8) and future expectations (46.5 vs 47.3) got worse. Personal finances took a big hit, falling nearly 10% due to weaker incomes. Nearly 75% of consumers mentioned tariffs as a concern, up from 60% in April, showing trade policy uncertainty is a major worry.
Inflation expectations for the next year jumped to 7.3%, the highest since 1981, up from 6.5%, while long-term inflation expectations also rose slightly to 4.6% from 4.4%.
