NFIB’s Small Business Optimism Index Increases in June, But Remains Below 49-Year Average

The National Federation of Independent Business (NFIB), one of the largest small business associations in the US, reported on Tuesday (7-11-23) its NFIB Small Business Optimism Index (SBOI) for June. According to the report, the June SBOI increased 1.6 points to a reading of 91.0. This is the eighteenth 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 cited inflation and labor quality as their top small business concerns, each drawing 24% of responses. The net percentage of owners raising their average selling prices decreased three points to a net 29%, seasonally adjusted, still a very inflationary level but trending lower. This is the lowest reading since March 2021.

Other highlights of the SBOI include the following:

• Small business owners expecting better business conditions over the next six months improved 10 points from May to June but remain at a net negative 40%, which is 21 percentage points better than June 2022’s reading of a net negative 61%.
• Forty-two percent of small business owners reported job openings that were hard to fill. That is down two points from May but remains close to historically high levels.
• The net percentage of owners who expect real sale to be higher improved seven points from May but still remains at a net negative 14%.

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

“Halfway through the year, small business owners remain very pessimistic about future business conditions and sales prospects. Inflation and labor shortages continue to be great challenges for small businesses. Owners are still raising selling prices at an inflationary level to try to pass on higher inventory, labor, and energy costs.”