In June, the National Federation of Independent Business (NFIB) Small Business Optimism Index remained steady, decreasing only 0.2 of a point to 98.6. The level remains above the 51-year average of 98, highlighting continued resilience among small business owners. The keyphrase small business optimism reflects the tempered confidence that many firms maintain, despite economic uncertainty.
A significant rise in owners reporting excess inventories was the main driver behind the slight decline in the index. While the net share of businesses expecting improved conditions fell compared to May, expectations overall stayed in positive territory.
Taxes, Labor Quality Remain Top Issues
For the second consecutive month, 19% of owners cited taxes as their most pressing problem, an increase of one point over the prior month. Labor quality concerns held steady at their lowest level since April 2020, showing that while hiring remains an obstacle, it is not as severe as in past years.
Inflation concerns showed a mixed trend. The percentage of business owners who listed inflation as their primary problem dropped to the lowest point since September 2021. Yet, the net share of firms raising their average selling prices rose four points in June. The uptick suggests that inflationary pressures may persist into the second half of the year.
Confidence Improves Despite Economic Concerns
The NFIB’s uncertainty index declined five points to 89, the lowest reading since early spring. According to the report, this decrease indicates that small business owners are gaining confidence in their ability to anticipate trade policy changes and other economic variables.
NFIB Chief Economist Bill Dunkelberg stated in the organization’s release, “While small business optimism has softened slightly, overall sentiment remains solid compared to historic averages. Owners are adapting to an environment where costs are rising and customers are cautious.”
In June, eight percent of small businesses rated their overall condition as excellent, while 49% said their status was good. Another 35% described their health as fair, and seven percent reported poor conditions.
Pricing Pressure May Signal Inflation Risk
Even with declining inflation concerns, the increase in businesses raising prices could point to cost pressures building again. Economists note that if the trend continues into late summer, consumers could see higher prices for goods and services.
Small business optimism has often been a bellwether for economic trends across the San Gabriel Valley and surrounding communities. With many local firms facing rising insurance costs, wages, and supplier prices, their decisions to adjust pricing could influence broader inflation readings in the months ahead.
The NFIB Small Business Optimism Index surveys thousands of business owners across sectors including retail, services, and manufacturing. The measure tracks indicators such as plans for hiring, capital outlays, sales expectations, and business conditions.
For more information and a detailed breakdown of the June survey results, visit the NFIB’s official website at www.nfib.com.
