Jesse Scheckner
The National Federation of Independent Business (NFIB) Small Business Optimism Index slipped slightly in June amid signs of swelling inventories and continued tax concerns.
According to NFIB’s June report, the index dipped 0.2 points to 98.6 — just above its 51-year average of 98. The leading contributor to the index’s decline was an increase in small-business owners reporting excess inventories. A net negative 5% of owners viewed their current inventory stocks as “too low,” signaling an inventory surplus that outpaced May’s figures.
Twelve percent said inventories were “too high,” up from 7% the month before. Meanwhile, the Uncertainty Index dropped 5 points to 89, suggesting slightly more predictability in business conditions.
Taxes remain the top issue for small-business owners, with 19% identifying taxes as their most important problem, matching the highest level since July 2021.
Although state-specific data wasn’t released, NFIB Florida Executive Director Bill Herrle cited recent legislative action as a positive influence.
“Florida’s small business owners are feeling more optimistic about their business conditions, especially after the Florida Legislature finally eliminated the business rent tax,” he said in a statement.
“The small business community will continue to hire and invest in their employees to further strengthen Florida’s economy.”
The recent elimination of Florida’s business rent tax was a long-sought priority for Florida’s small business community, and groups like NFIB lobbied intensely for its passage.
Other notable findings from the June survey:
— Business owners’ expectations for better business conditions fell to a net 22%, still well above the 51-year average of 3%.
— Owners anticipating higher real sales volumes dropped 3 points to a net 7%.
— Capital spending plans fell slightly, with 21% planning outlays in the next six months.
— Hiring challenges persist, but conditions are improving. A declining share of small-business owners have been citing labor quality as their top issue, holding steady at 16% in June — down 3 points from March.
— Reports of poor sales as the top problem ticked up to 10%, while inflation as a top concern fell to 11%, the lowest it’s been since September 2021.
— Although a net negative 5% of owners reported higher nominal sales in the past three months, that figure represented an 8-point jump from May — the sharpest monthly increase since April 2021.
— Wage pressures remain elevated. A seasonally adjusted net 33% of owners reported raising compensation in June, up 7 points, marking the largest monthly increase since January 2020. Just 19% said they plan to raise pay further in the next three months.
— Spending also showed signs of restraint. Half of owners reported capital outlays in the past six months, the lowest since August 2020. Of those, 33% bought new equipment, 18% acquired vehicles and 13% upgraded facilities.
— Profit trends remained negative but improved slightly. A net negative 22% of small-business owners reported positive profit trends, though 42% attributed higher profits to stronger sales volume.
— Financing conditions saw little change. Three percent of owners cited financing or interest rates as their top concern. A net 5% said their most recent loan was harder to obtain.
— Eleven percent of business owners believe now is a good time to expand, up slightly from May but still historically low.
The NFIB Research Center has surveyed small businesses since 1973. Its June survey was based on responses from randomly selected NFIB members.
