Monday, June 24, 2024

Small Business Owners’ Optimism Rises, but Inflation Remains a Problem

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Small business owners are more optimistic than they’ve been throughout 2024 but they remain less optimistic than they have been historically.

The NFIB Small Business Optimism Index rose 0.8 point to 90.5 in May, a figure that is the highest level of the year but is still below the historical average of 98, the NFIB said in a Tuesday (June 11) press release.

The Index has been below that historical average for 29 consecutive months, according to the release.

“Small business owners need relief as inflation has not eased much on Main Street,” Bill Dunkelberg, chief economist at NFIB, said in the release.

Inflation remains the top concern in this sector, with 22% of small business owners saying that it is the single most important problem they face in operating their business, per the release.

Labor quality was the second most cited concern, with 20% of owners saying it is their top business problem.

Ten percent of small business owners said labor costs is their biggest problem — a figure that is 3 points below the highest reading of 13% seen in December 2021.

Financing is a growing concern, according to the release. Six percent of small business owners said financing was their top business problem, a figure that was up 2 points from April and the highest it’s been since June 2010.

The NFIB also found that the share of small business owners saying their current inventory stocks are “too low” fell to its lowest point since October 1981, the share of owners planning to raise compensation in the next three months dropped to its lowest reading since March 2021, and the share planning to hire rose to its highest level of 2024, per the release.

PYMNTS Intelligence has found that Main Street small and medium-sized businesses (SMBs) are demonstrating real resiliency despite news about rising inflation and stalled interest rates.

Most mom-and-pop shops are seeing an upward trajectory in revenues, continuing a three-year upward trend dating back to April 2021, according to “Small Main Street Businesses: Growing Fast Ahead of the Economy.”

More than half of Main Street SMBs reported increasing revenues in January, and the sector’s revenue growth exceeded nominal GDP growth in 2023, per the report.

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