The NFIB Small Business Optimism Index ticked down 0.2 points in June to 98.6, slightly above the 51-year average of 98, while the Uncertainty Index decreased by five points to 89.
However, small business owners reported a substantial deterioration in the overall health of their businesses. When asked to rate the overall health of their business, 8 percent said excellent (down six points), and 49 percent reported good (down six points). Further, 35 percent reported the health of their business as fair (up seven points), and 7 percent reported it as poor (up three points).
Among the key findings:
- About 19 percent of small business owners called taxes their single most important problem, up one point from May.
- A net negative 5 percent 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.
- The net percent of owners expecting better business conditions fell three points from May to a net 22 percent. Historically, this is still a positive reading with the 51-year average at a net 3 percent.
- The net percent of owners expecting higher real sales volumes fell three points from May to a net 7 percent.
- Twenty-one percent plan capital outlays in the next six months, down one point from May.
- The percent of small business owners reporting labor quality as the single most important problem for business remained at 16 percent, unchanged from May.
- Eleven percent of owners reported that inflation was their single most important problem in operating their business (higher input costs), down three points from May and the lowest reading since September 2021. Inflation pressures continue to ease on Main Street.
Further, 36 percent of all small business owners reported job openings they could not fill in June, up two points from May. In addition, labor costs reported as the single most important problem for business owners rose one point in May to 10 percent.
Also, a net 33 percent reported raising compensation, up seven points from May and the largest monthly increase since January 2020.
Meanwhile, 50 percent of owners reported capital outlays in the last six months, down six points from May and the lowest reading since August 2020. Of those making expenditures, one-third reported spending on new equipment, while 18 percent acquired vehicles, and 13 percent improved or expanded facilities.
“Small business optimism remained steady in June while uncertainty fell,” NFIB Chief Economist Bill Dunkelberg said. “Taxes remain the top issue on Main Street, but many others are still concerned about labor quality and high labor costs.”