Small business owners showed increased optimism about the economy in July, but inflation remains a significant challenge, according to the National Federation of Independent Businesses (NFIB). The NFIB’s Small Business Optimism Index rose 2.2 points to 93.7, marking the highest level since February 2022. However, this marks the 31st consecutive month below the 50-year average of 98.
Despite the improved outlook, 25% of small business owners identified inflation as their top concern, up four points from June. “Cost pressures, particularly labor costs, continue to burden small businesses,” said NFIB Chief Economist Bill Dunkelberg. “The road ahead remains uncertain as owners face unpredictable economic conditions.”
The survey also revealed a decline in the number of businesses raising employee compensation, with only 33% doing so in July, down five points from June and the lowest level since April 2021. Additionally, the net percentage of businesses increasing average selling prices dropped five points to 22%, while plans for future price hikes also decreased.
These findings underscore the ongoing impact of inflation on small businesses, despite a decline in the consumer price index from its peak of 9.1% to 3% year-over-year in June. Inflation remains more than 18% higher compared to January 2021, reflecting the continued challenges on Main Street.
