The Optimism Index declines slightly but remains above the 51-year average of 98.
The National Federation of Independent Business (NFIB) reports that its Small Business Optimism Index remained relatively steady in June, slipping just 0.2 of a point to 98.6, but still above the 51-year average of 98.
The biggest contributor to the Index decline was a substantial increase in reported excess inventory.
The Uncertainty Index significantly decreased, falling five points from May to 89.
Taxes are once again the single most important problem for small business owners, with 19% reporting taxes as their chief concern. The last time taxes reached 19% was in July 2021.
“Small business optimism remained steady in June while uncertainty fell,” says NFIB Chief Economist Bill Dunkelberg. “Taxes remain the top issue on Main Street, but many others are still concerned about labor quality and high labor costs.”
Key findings include:
- A net negative 5 percent (seasonally adjusted) of owners viewed current inventory stocks as “too low” in June, down six points from May. This signals a net increase in inventories, with 7 percent reporting inventories “too low” in June compared to 8 percent in May. Twelve percent reported current inventories “too high” in June compared to 7 percent in May. This component contributed the most to the Optimism Index’s decline.
- Small business owners reporting labor quality as the single most important problem for businesses remained at 16 percent, unchanged from May. The last time complaints about labor quality fell below 16 percent was in April 2020.
- Fifty percent of small business owners reported capital outlays in the last six months, down six points from May and the lowest reading since August 2020.
- Inflation as the single most important problem for small business owners fell to 11 percent, down three points from May and the lowest reading since September 2021.
- Labor quality as the single most important problem remains at 16 percent, steady with May’s report. The last time labor quality fell below 16 percent was April 2020.
- A net negative 5 percent of all owners (seasonally adjusted) reported higher nominal sales in the past three months, up eight points from May. This is the highest reading since January 2023 and the largest monthly jump since April 2021.
- Seasonally adjusted, a net 33 percent reported raising compensation, up seven points from May and the largest monthly increase since January 2020.
JOBS
As seen in NFIB’s Monthly Jobs Report, 36 percent (seasonally adjusted) of small business owners reported unfilled job openings in June, up two points from May.
More business owners reported hiring or trying to hire in June, with 58 percent of owners looking to fill open positions, up three points from May. Of those hiring, 86 percent reported few or no qualified applicants for positions they were trying to fill.
CONCERNS
Taxes are once again the greatest concern for small business owners.
Labor quality at 16 percent and inflation at 11 percent are the second and third biggest issues for small businesses, according to the June Small Business and Economic Trends report, with labor quality remaining steady and inflation significantly dropping from May.
Poor sales are also on the rise for small businesses, climbing one point as the top issue to 10 percent, its highest reading since March 2021.
