The confidence level among small-business owners in the U.S. showed improvement in June, although it still falls below the long-term average. The National Federation of Independent Business (NFIB) reported on Tuesday that its small-business optimism index rose from 89.4 in May to 91 in June. Despite this increase, the index is still significantly lower than the 49-year average of 98.
While the June reading was slightly higher than the consensus forecast of 89.6 from economists polled by The Wall Street Journal, concerns about inflation and labor quality continue to weigh heavily on small-business owners. In fact, these two factors were tied as the top concerns among owners, with 24% citing each as their single most important challenge.
The NFIB survey serves as a monthly snapshot of small businesses in the U.S., which make up almost half of all private sector jobs. Looking ahead, the data revealed that 40% of owners expect better business conditions over the next six months, showing a significant improvement of 10 percentage points from May. Additionally, this figure is 21 points better than it was a year ago.
Although there was a slight decrease of two percentage points to 42% among owners who found job openings difficult to fill in June, this reading is still considered historically high.
NFIB Chief Economist Bill Dunkelberg expressed concern about the pessimism among small-business owners regarding future business conditions and sales prospects halfway through the year. He emphasized that inflation and labor shortages continue to pose significant challenges for these businesses.
The rise in costs associated with inventory troubles, labor, and energy is also forcing small-business owners to raise prices, according to Dunkelberg.
By Ben Glickman