U.S. small business optimism rises despite labor shortage, inflation worries

People make their way in a local street of Chinatown in the Manhattan borough of New York City, New York, U.S., March 25, 2021. REUTERS/Eduardo Munoz/File Photo

Confidence among small businesses in the United States improved slightly in June after declining in May, despite owners worrying about a labor shortage and inflation, according to a survey released on Tuesday.

The National Federation of Independent Business (NFIB) Optimism Index rose 2.9 points to a reading of 102.5 in June. Seven of the 10 index components improved and three declined.

“Small businesses’ optimism is rising as the economy opens up, yet a record number of employers continue to report that there are few or no qualified applicants for open positions,” NFIB Chief Economist Bill Dunkelberg said in a statement.

“Owners are also having a hard time keeping their inventory stocks up with strong sales and supply chain problems.”

A net 28% of businesses plan to create new jobs in the next three months, up one point from May and a record high.

Earlier this month, the trade group said in its monthly jobs report that 46% of small business owners reported unfilled job openings in June on a seasonally adjusted basis, down from 48% in May.

The quality of labor ranked as businesses’ “single most important problem,” with 26% of respondents selecting it among 10 issues, near the survey high of 27%. Some 56% of respondents said they had few or no qualified applicants for open jobs in June, down from 57% in May.

The NFIB survey comes as the number of Americans filing new claims for unemployment benefits slightly rose last week while continuing claims declined.

Additionally, hiring appears to have strengthened in June as U.S. companies hired the most workers in 10 months.

Businesses in the NFIB survey also flagged inflation as a worry, and a record 44% plan to increase prices in the next three months.