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Retail leads the way for small business success in January

Small business
Nationally, the seasonally adjusted Index for January was 147, a one-point increase from December.

Even after strong results during the holiday season, small business sales continued to increase in January.

On a year-over-year basis, small business sales (+5.1%) and total transactions (+6.5%) showed healthy growth compared to January 2024, according to the latest monthly Fiserv Small Business Index. Month-over-month sales (+0.5%) and transactions (+1.3%) also grew to start 2025. Nationally, the seasonally adjusted Index for January was 147, a one-point increase from December.

“Small businesses saw continued growth in January, starting 2025 off on the right foot,” said Prasanna Dhore, chief data officer at Fiserv.

Consumer spending at small business retail remained strong with sales (+4.1%) and transactions (+5.1%) growing year-over-year. Average ticket sizes (-1.0%) declined slightly compared to January 2024. Year-over-year, the fastest-growing retail categories were general merchandise (+11.0%), grocery (+5.6%) and building materials (+4.5%).

On a monthly basis, small business retail sales (+0.2%) and transactions (+0.8%) saw modest growth, while average ticket sizes declined (-0.6%). The strongest month-over-month gains were seen across building materials (+1.9%), gasoline stations (+1.6%) and grocery (+0.7%). After a strong holiday season, parts of retail, including clothing (-3.4%), furniture (-1.9%), motor vehicle parts (-0.8%) and general merchandise (-0.1%) saw their growth slow in January.

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Consumer spending at small business restaurants declined (-1.7%) year-over-year in January despite transactions (or foot traffic) growing (+6.5%). Negative growth was the result of lower average ticket sizes (-8.3%) compared to 2024, which Fiserv says reflects inflation-induced pressures, with consumers shifting to lower cost options. Similarly, month-over-month restaurant sales (-1.3%) declined while total restaurant transactions (+1.8%) grew. Average ticket sizes (-3.1%) fell compared to December.

With small business retail spending steady, and restaurant sales declining, consumers shifted more dollars in January to service-based businesses, which grew sales year-over-year (+5.5%) and month-over-month (+0.8%).

[READ MORE: Small business feeling more optimistic, but concerned about interest rates]

On an annual basis, the fastest-growing service categories were professional services (+13.4%), food manufacturing (+12.5%), religious, civic and professional organizations (+10.2%), and truck transportation (+8.7%).

Compared to December 2024, professional Services (+3.2%), religious, civic and professional organizations (+2.5%) and educational services (+2.2%) saw the most growth.

Fiserv found that the states showing the most year-over-year sales growth were Wisconsin (+13.9%), Florida (+11.9%), Georgia (+11.5%), Virginia (+10.4%) and Minnesota (+9.0%). The strongest performing states month over month were Maryland (+4.2%), Montana (+3.5%) and Iowa (+3.5%).

Large cities showing the most year-over-year sales growth were Atlanta (+14.3%) and Miami (+9.8%). On a monthly basis, sales growth was strongest in Boston (+2.5%), Washington DC (+2.0%) and Philadelphia (+1.8%).

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