Small business owner optimism reached a nearly 2 1/2-year high in July even as inflation continued to weigh down overall sentiments, according to the National Federation of Independent Business.
July’s NFIB Small Business Optimism Index increased 2.2 points to 93.7, its highest reading in nearly 2 1/2 years. However, the index was still well below the study’s 50-year average of 98.
Inflation remained the No. 1 issue among small business owners, as 25 percent cited it as their top problem in operating their business. Nineteen percent reported labor quality as their most pressing concern.
“Despite this increase in optimism, the road ahead remains tough for the nation’s small business owners,” said NFIB Chief Economist Bill Dunkelberg. “Cost pressures, especially labor costs, continue to plague small business operations, impacting their bottom line. Owners are heading towards unpredictable months ahead, not knowing how future economic conditions or government policies will impact them.”
A seasonally adjusted net 22 percent of owners raised average selling prices, down five points from June. A net 24 percent plan price hikes, the smallest share since the spring of 2023. A seasonally-adjusted 38 percent of owners had job openings they couldn’t fill, up one point from June. Of the 57 percent of owners who were either hiring or trying to hire last month, 86 percent reported having few or no qualified applicants.
A net 33 percent raised compensation, down five points from June and the lowest reading since the spring of 2021. A net 18 percent expect to raise compensation in the next three months, down four points from June.
One-third of small business owners reported raising compensation on a seasonally-adjusted basis, down five points from June and its lowest reading since April 2021. A net 2 percent of owners plan to invest in inventory in the coming months, up four points from June. A net negative 9 percent of owners expect higher real sales volumes, its highest reading of 2024.