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The
National Federation of Independent Business (NFIB) said its
Small Business Optimism Index rose eight-tenths of a point to
90.5 last month, the second consecutive month it has risen after
slumping in March to the lowest level since December 2012.
Despite the gain, it was the 29th straight month the index was
below the 50-year average of 98. The NFIB's Uncertainty Index
rose nine points to 85, the highest reading since November 2020,
the month the last U.S. presidential election took place.
Twenty-two percent of owners reported that inflation was their
single most important problem in operating their business,
unchanged from April. The share of businesses planning price
hikes increased two points to 28%.
The net percent of owners raising average selling prices was
25%, also unchanged from April. The Federal Reserve is keenly
monitoring the pace of price increases as it tries to return
inflation to its 2% target.
There were some indications that small business owners may be
beginning to pull back on raising wages. A net 37% of owners
reported increasing compensation, down one point from 38% in
April, while 18% planned to boost compensation over the next
three months, down three points and the lowest reading since
March 2021.
Small businesses have increasingly felt pressured in the face of
persistent inflation and high borrowing costs. The U.S. central
bank on Wednesday is expected to leave its benchmark overnight
interest rate unchanged in the current 5.25%-5.50% range, where
it has been since last July. The Fed has raised its policy rate
by 525 basis points since March 2022 in order to quash elevated
inflation.
"For 29 consecutive months, small business owners have expressed
historically low optimism and their views about future business
conditions are at the worst levels seen in 50 years," said Bill
Dunkelberg, NFIB's chief economist, as inflation once again
topped the list of small business owners' concerns.
Inflation remains sticky at elevated levels and renewed evidence
that the job market continues to add workers at a solid clip has
caused financial markets to reduce bets to about even odds that
the Fed will start its easing cycle in September.
(Reporting by Lindsay Dunsmuir; Editing by Paul Simao)
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