US small business confidence up – NFIB

US small businesses are showing tentative signs of optimism, according to a survey released on Tuesday by the National Federation of Independent Business (NFIB).

The NFIB’s Small Business Optimism Index rose to 90.5 in May, the highest level of 2024. However, the survey also revealed rising uncertainty, potentially linked to the upcoming US presidential election.

The NFIB index rose 0.8 points from April, marking the second consecutive month of improvement after a March slump to the lowest level since December 2012.

Despite the gain, the index remains below its historical average (98) for the 29th straight month. Notably, the NFIB’s Uncertainty Index jumped by nine points to 85, the highest reading since the November 2020 presidential election.

Inflation continues to be the primary concern for small business owners, with 22 per cent citing it as their biggest obstacle. The share of businesses planning price hikes also rose slightly to 28 per cent.

Small businesses are struggling with inflation and higher borrowing costs. The Federal Reserve is likely to keep its benchmark interest rate steady at 5.25-5.50 per cent on Wednesday to address inflation.

Bill Dunkelberg, NFIB’s chief economist, highlights that inflation remains the top concern, contributing to the worst outlook on future business conditions in 50 years.

Attribution: Reuters