The Bank of America Institute reported that the firm's data signaled a slowdown in hiring by small businesses as tariff payments by firms that import goods have surged.
The report found that small businesses' payments to hiring firms fell for the third straight month in July, according to Bank of America's proprietary small business data. The firm's data showed that hiring was down 6.7% year-over-year on a three-month moving average, with July marking the third straight month of declines.
Taylor Bowley, an economist with the Bank of America Institute, told FOX Business in an interview that comes as a reversal from the start of the year and coincides with small business clients that make direct payments to customs seeing those expenses rise by nearly 170% from the start of this year amid the Trump administration's higher tariffs.
"We're starting to see construction and manufacturing hiring payments ramp up, whereas other sectors like retail and services have fallen off," Bowley said.
Bowley noted that small business profitability growth has remained positive, it has started to decelerate and added that while consumer spending growth has increased, it's unclear at this time whether it's because consumers are buying more or if they're facing higher prices due to tariff price hikes on those goods.