NFIB’s Small Business Optimism Index Increased 0.4 Points in May—Remains Below 49-Year Average

The National Federation of Independent Business (NFIB), one of the largest small business associations in the US, released on Tuesday (6-13-23) its NFIB Small Business Optimism Index (SBOI) for May. According to the report, the May SBOI increased 0.4 points to a reading of 89.4. This marks the seventeenth consecutive month that the SBOI has been below the 49-year average reading of 98. The last time the Index was at or above the average was December 2021.

Small business owners expecting better business conditions over the next six months declined one point from April to May to a net negative reading of 50%. Twenty-five percent of business owners reported that inflation was their single most important problem in operating their business—up two points month-over-month—and that was closely followed by labor quality at 24%.

Other highlights of the SBOI include the following:

• Forty-four percent of business owners reported job openings that were hard to fill. This is down 1 point from last month but still remains historically high.
• The net percentage of owners raising average selling prices decreased one point to a net 32% (seasonally adjusted), still an inflationary level but trending down.
• The net percentage of owners who expect real sales to be higher declined 2 points from April to a net negative 21% reading.

Adding additional background and his analysis to the release of the SBOI, NFIB Chief Economist Bill Dunkelberg said:

“Overall, small business owners are expressing concern for future business conditions. Supply chain disruptions and labor shortages will continue to limit the ability of many small firms to meet the demand for their products and services, while less severe than last year’s experience.”