Small businesses reported feeling slightly less optimistic in June than in May, a new survey found.
Excess inventory in June was the main reason for small business owners' slight drop in reports of feeling optimistic, according to the survey released Tuesday by the nonprofit small business advocacy group the National Federation of Independent Business. Reports of current inventories being “too high” rose by 5% from May to June. The NFIB Small Business Optimism Index saw a slight drop by 0.2% from May to June.
When rating the overall health of their business, responses showed “substantial deterioration.” According to the survey, reports of respondents' businesses doing excellent or good dropped by six percentage points, while reports of their businesses’ health being “fair” increased by seven percentage points.
Respondents to the survey reported taxes as their biggest pain point, rising 1% in June to 19%. According to the report, the last time reports of taxes being small business owners’ most important problem reached as high as 19% was in July 2021.
Sixteen percent of respondents reported labor quality as their most important problem in June, remaining the same from May’s report. The last time complaints about labor quality fell below 16% was in April 2020, the survey said.
“Fewer small business owners reporting labor as their top problem aligns with other data suggesting a more tempered labor market economy-wide,” the report said.
However, as consumer concerns about tariffs increasing prices remain, small businesses reported feeling less concerned about inflation in June than in May. Respondents ranking inflation as their most important issue dropped by three percentage points from 14% in May to 11% in June — the lowest percentage since September 2021, the survey said.
Thirty-two percent (seasonally adjusted) of small businesses plan to raise prices, reportedly the highest rate since March 2024.