According to data from the National Federation of Independent Business, small business owners became slightly more optimistic about the economy last month, but the share of business owners who say inflation is their biggest business problem increased.
The NFIB said Tuesday that its Small Business Optimism Index rose 2.2 points in July to 93.7, the highest reading since February 2022 but remains below the 50-year average of 98 for the 31st consecutive month.
Inflation remains the top issue for small business owners, according to the latest NFIB survey. (iStock / iStock)
Meanwhile, the percentage of small business owners citing inflation as their biggest problem rose 4 percentage points from June to 25%.
“Despite growing optimism, the road ahead remains tough for the nation’s small business owners,” said Bill Dunkelberg, NFIB’s chief economist.
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“Cost pressures, particularly labor costs, continue to plague small business operations and impact bottom lines,” Dunkelberg continued. “Business owners are facing an unpredictable few months ahead, not knowing how future economic conditions and government policies will affect them.”
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Fewer small and medium-sized businesses increased employee compensation last month, with just 33% increasing salaries on a seasonally adjusted basis, down five percentage points from June and the lowest level since April 2021, the survey found.
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At the same time, the net share of owners increasing their average selling price fell 5 percentage points from June to a seasonally adjusted 22%, while the share of owners planning to increase prices in July fell 2 percentage points to 24%, the lowest since April.
Interior of a small shoe and watch repair shop in Queens, New York, with equipment and a neon sign. (Photo: Lindsey Nicholson/UCG/Universal Images Group via Getty Images / Getty Images)
The NFIB said its latest findings show that inflation has been well above the Federal Reserve’s 2 percent target rate for years and continues to plague Main Street.
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While the consumer price index has fallen from a peak of 9.1%, it is still significantly higher than pre-pandemic levels, rising 3% year-on-year in June.
Compared to January 2021, before prices began to skyrocket, inflation has increased by more than 18%.
