The NFIB’s Small Business Optimism Index Sets New Record Low in May 2022

The National Federation of Independent Business (NFIB), one of the largest small business associations in the US, reported today (6-14-22) their NFIB Small Business Optimism Index (SBOI) for May. According to the report, the May SBOI fell below the 48-year average reading of 98 for the fifth consecutive month to a reading in May of 93.1. That is -0.1 points below the April reading and a new record low for the index.

Owners surveyed in May expecting better business conditions over the next six months decreased four points to a net negative 54%, the lowest level recorded in the 48-year-old survey. Expectations for better business conditions have deteriorated every month since January.

Twenty-eight percent of owners reported inflation was their single most important problem in operating their business, a decrease of four points from April. The net percent of owners raising average selling prices increased two points to a net 72% (seasonally adjusted), back to the highest reading in the 48-year-history of the survey last reached in March and 32 points higher than May 2021.

Other highlights of the May SBOI report include the following:

1. Fifty-one percent of owners reported job openings that could not be filled, up four points from April.
2. The net percent of owners who expect real sales to be higher decreased three points from April to a net negative 15%.
3. A net 46% (seasonally adjusted) of owners reported raising compensation, down three points from April with a net 25% planning to raise compensation in the next three months, down two points from April but still historically high.
4. Thirty-nine percent of owners report that supply chain disruptions have had a significant impact on their business, up three points. Another 31% report a moderate impact and 22% report a mild impact. Only 8% of owners report no impact from the recent supply chain disruptions.

In a statement prepared for the release of the May Index, NFIB Chief Economist Bill Dunkelberg said, “Inflation continues to outpace compensation which has reduced real incomes across the nation. Small business owners remain very pessimistic about the second half of the year as supply chain disruptions, inflation, and labor shortage are not easing.”