NFIB Small Business Optimism Index Edges Lower in June

On Tuesday, the National Federation of Independent Business (NFIB), one of the largest small business associations in the US, released its Small Business Optimism Index (SBOI) for June. The index edged down 0.2 points to 98.6, slightly above the 51-year average of 98.

The Uncertainty Index fell five points from May to 89. Taxes remained the top concern for small business owners, with 19% citing it as their most important problem—up one point from May. This matches the level last seen in July 2021.

Highlights from the June SBOI include the following:

• A net negative 5% of owners (seasonally adjusted) viewed their current inventory levels as “too low,” down six points from May. This suggests an overall inventory build. In June, 7% said inventories were “too low” (versus 8% in May), while 12% said they were “too high” (up from 7%). This component contributed most to the decline in the overall index.
• The net percentage of owners expecting better business conditions fell three points to a seasonally adjusted net 22%. While down from May, this remains well above the 51-year average of 3%.
• Owners expecting higher real sales volumes declined by three points to a net 7%, seasonally adjusted.
• Twenty-one percent (seasonally adjusted) plan capital outlays in the next six months, down one point from May.
• Labor quality remained a key issue, with 16% of owners naming it their most important problem—unchanged from May. This is the lowest level since April 2020 and reflects a broader trend of easing labor market pressures.
• Inflation was cited as the top concern by 11% of owners, down three points from May and the lowest level since September 2021.
• Business health indicators weakened: Only 8% of owners rated their business as “excellent” (down six points), and 49% said “good” (also down six). Meanwhile, 35% rated their business as “fair” (up seven), and 7% said “poor” (up three).

Commenting on the SBOI, NFIB Chief Economist Bill Dunkelberg said:

“Small business optimism remained steady in June while uncertainty fell. Taxes remain the top issue on Main Street, but many others are still concerned about labor quality and high labor costs.”