Inflation top reason for diminished confidence
According to the National Federation of Independent Business’s (NFIB) report, Small Business Optimism Index fell in June to its lowest level in nearly a decade, reflecting poor expectations for the remainder of the year.
The organization’s optimism index dropped to a level of 89.5 in June, down 3.6 points from May. This is the sixth consecutive month when the index has fallen below the 48-year average of 98.
It was also reported that small business owners who were expecting better business conditions over the next six months fell seven points to a net negative 61%, the lowest level recorded in the 48-year survey.
According to according to the NFIB, inflation continues to be a top concern for small businesses, with 34% of owners citing it as their most important issue in operating their business, the highest level since quarter four in 1980.
Other key findings include of the Small Business Optimism Index:
- The net percent of owners who expect real sales to be higher decreased by 13 points from May to a net negative, 28%
- 50% of owners reported vacant job openings, down one point from May but historically high
- The net percent of owners raising average selling prices decreased three points to 69%, following May’s record high reading
- Separately, NFIB’s monthly jobs report revealed owners’ optimism to fill open positions, with 19% planning to create new jobs in the next three months
- The NFIB survey was conducted in June and includes data from randomly drawn respondents through its membership.
NFIB Chief Economist Bill Dunkelberg commented: “As inflation continues to dominate business decisions, small business owners’ expectations for better business conditions have reached a new low. On top of the immediate challenges facing small business owners including inflation and worker shortages, the outlook for economic policy is not encouraging either as policy talks have shifted to tax increases and more regulations.”