Economic confidence among small U.S. companies fell in August to the lowest level since November 2012
By Ruth Simon, Megumi Fujikawa and Paul Hannon Sept. 2, 2019 7:26 pm ET The escalating trade war between the U.S. and China is rippling through the global economy, hurting confidence among U.S. small businesses, crimping trade among industrial giants in Asia and hitting export-oriented factories in Europe.
Japan, meanwhile, said Monday that capital spending by the country’s manufacturers fell 6.9% in the April-June quarter, the first decline in two years, as companies grappled with a nearly double-digit decline in exports to China. South Korea said Sunday its exports to China fell 21.3% in August compared with the same month a year earlier, driving an overall 13.6% decline in exports.
Surveys of purchasing managers in Japan, Taiwan, South Korea and Indonesia also pointed to declines in manufacturing activity in August, with mixed results in China. In Europe reported drops in manufacturing activity were most pronounced in Germany, the continent’s exporting powerhouse and a leading global supplier of machinery and equipment.
In the survey, some U.S. small-business owners said they supported the tariffs, even if they are painful in the short run, and a majority said they are optimistic about their finances. Also, tariffs are just one factor contributing to changes in the economic outlook. “It’s hard enough to adjust to price increases, but it’s just more difficult when you are uncertain how policy will unfold in the future,” said Richard Curtin, a University of Michigan economist who analyzed the Vistage data. “For small firms that means being more cautious in your investment and hiring plans.”
Trade talks have mostly stalled since late May, when negotiators were believed to be close to a deal. Since then negotiators have sought, so far without success, to reach a limited preliminary arrangement that would have China committing to buying more U.S. farm products and the U.S. agreeing to ease off restrictions on China’s Huawei Technologies Co.
“There needs to be some kind of stabilization in the tariff situation and pricing,” Mr. Clark said. “I hate to sign a contract for the next two years without an element of certainty.”
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