By Joshua Kirby
U.S. small businesses are feeling more confident than they have all year, despite lingering concerns over inflation.
The National Federation of Independent Business said Tuesday that its small-business optimism index rose to 91.5 in June from 90.5 in May, marking the highest level since the end of last year.
But sentiment still lags its long-term average, represented by a reading of 98, as it has since the end of 2021. Inflation, while easing, remains too hot for owners’ liking, with pay hikes fueling higher prices all around, NFIB chief economist Bill Dunkelberg said. Compared with a month earlier, more business owners are planning to raise compensation in the next three months, the survey showed, and more raised selling prices in June.
“No relief from inflation is in sight for small-business owners as they prepare for the uncertain months ahead,” Dunkelberg said.
Inflation data for June will be set out Thursday, with markets, businesses and policymakers hoping to see evidence of a further down-trend in the pace of price rises. Federal Reserve boss Jerome Powell said recently that progress has been made in bringing inflation lower, and a further cooling could pave the way for interest-rate cuts as soon as September.
A tight jobs market meanwhile also remains a headache for the nation’s small firms. There was a slight decrease in the proportion of owners reporting positions they couldn’t fill in June, but some 85% of those looking said there were few or no qualified applications for those positions.
Reported profit trends also remained weak in June, albeit with a slight improvement compared with May, with firms setting out a downbeat view of their sales expectations ahead.
“Main Street remains pessimistic about the economy for the balance of the year,” Dunkelberg said.
Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby
(END) Dow Jones Newswires
July 09, 2024 06:14 ET (10:14 GMT)
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