A new report by the Bank of America Institute indicates that small businesses, despite experiencing economic challenges, show strength in various areas, including credit and debit card spending, business travel expenditures, and payroll payments.
Report Indicates Small Businesses Continued Resilience
According to the report, Small business payments per client have increased by 11% from August last year up from 3% in July. Additionally card spending per client in August was up 13%, outpacing July’s 7% growth rate. The number of travel transactions per small business client has reached 90% matching 2019’s average, the highest level since the pandemic began.
Other highlights of the publication include:
- Card spending by small businesses varied greatly across annual income levels, and small businesses with greater annual revenues spent at a faster pace than those with lower annual revenues.
- Among small businesses with annual sales revenue higher than $1 million, card spending per client for travel was up the most, at 43% year over year in August.
- After-tax wages based on the internal Bank of America consumer deposit data for small business clients were up 6.1% year over year on a 3-month rolling basis in August
“Despite economic headwinds like high inflation, small businesses are heading into the fall with cautious optimism. We see things like the rebound in small business travel and resilience in payroll payments as further evidence the economy is getting back on track,” said Anna Zhou, economist for the Bank of America Institute.
Small Business Returning
Additional signs that small business optimism is returning include that the August Small Business Optimism Index increased by two points from July to the highest level in three months, according to data by the National Federation of Independent Business.
Small businesses also showed strength in payroll payments. The three-month rolling average of payroll spend per client rose by 11% year-over-year in August, pointing to a healthy hiring and wage growth momentum. Restaurant and bar payroll payments may be moderating the most from recent improvements, partly reflecting easing wage inflation in leisure and hospitality with 18% growth from August 2021.