NFIB Small Business Optimism Index Trends Higher in May but Remains Below 50-Year Average

On Tuesday, the National Federation of Independent Business (NFIB), one of the largest small business associations in the US, released its latest Small Business Optimism Index (SBOI). The May SBOI increased 0.8 points to a reading of 90.5, but for the 29th consecutive month, it remained below the 50-year average of 98.0.

In May, 22% of owners reported that inflation was their single most important problem in operating their business, unchanged from April’s reading and still the number one problem for small business owners.

Other highlights of the SBOI include the following:

  • Seasonally adjusted, a net negative 8% of owners viewed current inventory stocks as “too low” in May, down four points from April and the lowest reading since October 1981.
  • Owners’ plans to hire rose 3 points in May to a seasonally adjusted net 15%, the highest reading of the year.
  • Seasonally adjusted, a net 28% plan price hikes in May, up 2 points from April.
  • 6% of owners reported that financing was their top business problem in May, up 2 points from April. The last time financing as a top business problem was this high was in June 2010.

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

“The small business sector is responsible for the production of over 40% of GDP and employment, a crucial portion of the economy. But for 29 consecutive months, small businesses owners have expressed historically low optimism and their view about future business conditions are at the worst levels seen in 50 years. Small business owners need relief as inflation has not eased much Main Street.”

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