NFIB Small Business Optimism Index Reaches Highest Reading of the Year

Small Business Optimism Index Reaches Highest Reading of the Year, NFIB Reports

In a recent report released by the National Federation of Independent Business (NFIB), the Small Business Optimism Index reached its highest reading of the year in May at 90.5. This marks a 0.8-point increase from the previous month but still remains the 29th consecutive month below the historical average of 98.

The report also highlighted a rise in the Uncertainty Index, which increased by nine points to 85, the highest reading since November 2020. One of the key findings of the report was that 22% of small business owners reported that inflation was their single most important problem in operating their business, making it the top business concern among owners.

NFIB Chief Economist Bill Dunkelberg emphasized the importance of the small business sector, stating that it is responsible for over 40% of GDP and employment. However, he expressed concern over the historically low optimism among small business owners and the challenging business conditions they are facing.

Despite these challenges, there were some positive findings in the report. Owners’ plans to hire rose three points in May to a seasonally adjusted net 15%, the highest reading of the year. Additionally, a net 28% of owners plan price hikes in May, up two points from April.

However, the report also highlighted some areas of concern, such as the increase in the number of owners citing financing as their top business problem and the decrease in the net percent of owners raising compensation.

Overall, the report paints a mixed picture of the small business landscape, with some positive indicators but also significant challenges that small business owners are facing. The NFIB will continue to monitor economic trends and provide updates on the state of small businesses in the coming months.