A survey of small business owners by the National Federation of Independent Business (NFIB) showed optimism dropped 3.6 points in June to a reading of 89.5, marking the sixth straight month below the 48-year average of 98. Most economists expected the NFIB Small Business Optimism Index to come in at a reading of 92.8, roughly even with May’s reading.
The survey also found that small business owners expecting better business conditions over the next six months decreased seven points to a net negative 61%, the lowest level recorded in the survey’s 48-year history. Expectations for better business conditions have worsened every month this year.
Inflation continues to be a top problem for small businesses, with 34% of owners reporting it was their single most important problem in operating their business, an increase of six points from May and the highest level since 1980.
The survey also found that the percentage of owners who expect their sales to be higher decreased 13 points from May to a net negative 28%, which the NFIB said was a “severe decline.”
Meanwhile, 50% of owners reported job openings that could not be filled. That is down one point from May, but remains historically very high.
The net percent of owners raising average selling prices decreased three points from May to 69%. Price raising activity of the past year has escalated, reaching levels not seen since the early 1980s, when prices were rising at double-digit rates.
“Small businesses are being whipsawed by high inflation, which could quickly turn into deflation as the economy slows and consumers brace for a recession. They haven’t been operating in a normalized environment since 2019, and they face an uncertain future. It’s no wonder that small business optimism is so low,” said Caleb Silver, Editor-in-Chief of Investopedia.