Small-business confidence in the U.S. increased in June to a six-month high, providing glimmers of hope in the industry. However, anxiety over inflation still prevails, with an increasing number of owners planning to raise workers’ salaries in the next three months.
According to a report by Reuters, the National Federation of Independent Business (NFIB) stated on Tuesday that the Small Business Optimism Index climbed by one point, reaching 91.5 last month. This is the highest level reached since December 2023.
The index has remained below 98, the 50-year average, for 30 consecutive months. Inflation concerns persist, which remains the top issue for small businesses, according to Nasdaq.
Approximately 22% of businesses plan to increase wages in the next three months, a four-point increase from May. Despite this, 37% of business owners report having job openings that remain unfilled, a five-point decrease from May.
Certain sectors, however, still face tight labor markets. The NFIB stated that the transportation, construction, and retail sectors continue to experience tight labor markets. The percentage of businesses with unfilled positions for unskilled labor increased by two points to 16% from the prior month’s 14%.
Conversely, the number of owners reporting job openings for skilled workers dropped by six points to 31%.
Overall, amid restrictive monetary policy, the labor market is loosening up. Government data showed that in May, there were 1.22 job openings for every unemployed individual. In June, the unemployment rate rose to a 2.5-year high of 4.1%.
In June, the percentage of businesses increasing their average selling prices rose by two points to 27%.
Bill Dunkelberg, NFIB chief economist, noted that “demand is still too strong to trigger widespread price reductions.”
“Rising labor costs are keeping pressure on price decisions, but the frequency of compensation increases is falling as well, a favorable development for the inflation fight,” he added.
It is also very likely that government data on Thursday will show consumer prices rising by 0.1% in June after no change was recorded in May, according to a survey of economists by Reuters.
