US small business optimism steady amid mixed signals in June: NFIB

The Uncertainty Index dropped by five points from May to 89. Nineteen per cent of small business owners cited taxes as their most pressing issue, marking an increase from May, and once again ranked as the top concern. The last time taxes reached 19 per cent was in July 2021, NFIB said in a press release.

“Small business optimism remained steady in June while uncertainty fell,” said Bill Dunkelberg, chief economist at NFIB. “Taxes remain the top issue on Main Street, but many others are still concerned about labour quality and high labour costs.”

The June index showed a slight dip, with a net negative 5 per cent of business owners viewing their current inventory stocks as ‘too low’. This marks a six-point decrease from May, signalling a net increase in inventories.

In June, 7 per cent of owners reported inventories as ‘too low’, down from 8 per cent in May, while 12 per cent reported inventories as ‘too high’, up from 7 per cent in May. This shift in inventory concerns was the primary factor behind the decline in the Optimism Index.

Business owners' expectations for better conditions dropped by three points, standing at a net 22 per cent, still above the 51-year average of 3 per cent. Similarly, expectations for higher real sales volumes fell by three points to a net 7 per cent.

In terms of capital investment, 21 per cent of owners’ plan capital outlays over the next six months, a slight decrease from May.

Labour quality remains a key challenge for small businesses, with 16 per cent of owners citing it as their most important issue, unchanged from May. This marks a decline from April 2020, when labour quality complaints were lower.

The percentage of small business owners reporting labour as their top concern aligns with other data suggesting a more tempered labour market across the economy.

Inflation pressures appear to be easing, with 11 per cent of owners now citing higher input costs as their most important problem, down three points from May and the lowest level since September 2021.

The overall health of small businesses has significantly deteriorated. The percentage of business owners rating their company as in ‘excellent’ or ‘good’ health fell, with 8 per cent reporting excellent health (down six points) and 49 per cent reporting good health (down six points).

Conversely, 35 per cent rated their business health as fair (up seven points), while 7 per cent reported poor health (up three points).

ALCHEMPro News Desk (SG)