The uncertainty index also increased significantly, jumping nine points to 85, the highest level since November 2020. Despite the increase in optimism, inflation remains the predominant concern for small business owners, with 22 percent cites as his most important problem. , unchanged since April.
A seasonally adjusted net 18 percent of owners plan to increase compensation in the next three months, a three-point decrease from April and the lowest reading since March 2021. Additionally, 42 percent of owners (seasonally adjusted ) reported job openings that may not be filled during the current period, according to NFIB’s monthly jobs report.
The US Small Business Optimism Index reached 90.5 in May 2024, its highest level this year, although still below the historical average. The uncertainty index rose to 85. Inflation remains the top concern for 22 percent of homeowners. Employment, sales and inventory trends showed mixed results, with rising labor and material costs weighing on profits.
Sales trends have also been challenging, with a net negative 14 percent of owners (seasonally adjusted) reporting higher nominal sales over the past three months. The net percentage of owners expecting higher actual sales volumes fell by one point to a net negative 13 percent (seasonally adjusted).
Inventory levels reflect the cautious stance of small business owners. The net percentage reporting inventory gains fell by one point to a net negative 7 percent. Without seasonally adjusting, 11 percent reported stock increases, while 15 percent reported decreases. A net negative (seasonally adjusted) 8 percent of owners considered current inventory stocks to be “too low,” the lowest reading since October 1981. Plans for future inventory investments remained unchanged from April, with a net negative 6 percent (seasonally adjusted). of owners planning to invest in inventory.
Price pressures persist, with a net 25 percent of homeowners increasing average sales prices, unchanged from April on a seasonally adjusted basis. Inflation remains the most important problem for 22 percent of homeowners. Unadjusted figures show that 12 percent reported lower average sales prices, while 40 percent reported higher prices. Price increases were most common in the retail (up 55 percent, down 6 percent) and manufacturing (up 42 percent, down 12 percent) sectors. Seasonally adjusted, a net 28 percent of homeowners planned price increases in May.
Compensation trends reflect current labor market challenges. A net 37 percent of owners (seasonally adjusted) reported increasing compensation, down one point from April. The percentage of owners planning to increase compensation in the next three months fell to 18 percent, three points lower than in April and the lowest reading since March 2021. Labor costs were cited as the top business issue by 10 percent. percent of owners, while 20 percent cited labor costs as the top business problem. percent said job quality was their main problem, just behind inflation.
Earnings trends remained weak, with a net negative (seasonally adjusted) 30 percent of owners reporting positive earnings trends, three points worse than April. Among those reporting lower profits, 32 percent blamed weaker sales, 15 percent pointed to rising material costs, 14 percent cited labor costs and 11 percent cited selling prices. Lower. For those reporting higher profits, 41 percent attributed higher sales volumes, 23 percent cited usual seasonal changes, and 10 percent pointed to higher sales prices.
Finally, financial concerns have increased: 6 percent of owners identified it as their main business problem in May, up two points from April. This is the highest level for this concern since June 2010.
Fiber2Fashion News Desk (DP)