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Small Business Optimism Surges to Record High, but Uncertainty and Labor Shortages Persist

Small Business Owners Face Increasing Uncertainty

Small Business Optimism Surges to Record High, but Uncertainty and Labor Shortages Persist

In May, small business optimism reached its highest levels this year, according to the National Federation of Independent Business (NFIB). The NFIB Small Business Optimism Index rose by almost a full point to 90.5, exceeding the expectations of economists surveyed by the Wall Street Journal and Dow Jones Newswire. Despite this increase in optimism, uncertainty also surged to its highest levels since 2020, with more small business owners expressing uncertainty or not knowing how to answer survey questions.

For 29 consecutive months, small business owners have shown historically low optimism, with their views on future business conditions at the lowest levels seen in 50 years. Inflation remained the top concern for small businesses in May, with 28% of owners raising prices, particularly in the retail sector. Despite this, more owners reported increasing their capital investments, reflecting a six-month trend of higher small business spending.

Although the percentage of owners planning to hire reached a peak for the year, the survey also indicated a decrease in the number of business owners raising or planning to raise wages. This trend was particularly notable among larger businesses with more than $5 million in annual revenue. However, many smaller businesses are still facing labor shortages and plan to hire more workers in order to meet demand and keep up with growing competition.

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