Small business owners’ confidence in the US economy has been shaken this quarter. According to the US Chamber of Commerce’s Small Business Index, the measure of small business owners’ confidence dropped from 62.1 in the fourth quarter to a reading of 60. Inflation is a top challenge shared by 54% of small businesses, many of whom are cutting back on spending. In addition, a smaller number are planning to increase investment over the next year; 38%, down from 47% in the previous quarter.

However, despite their perception of a weak economy, 63% of small business owners reported their business is in good health, with 64% feeling comfortable with their cash flow. Additionally, 70% of survey respondents reported no change in their number of employees over the past year, and 19% reported increasing staff.

The survey was conducted online between Jan. 16 and Feb. 2 by MetLife and the US Chamber of Commerce. It was completed by approximately 750 small business owners and decision-makers. These survey results demonstrate the challenging environment small businesses face, and their need for continued support from the public and private sectors.