US small business sentiment edges up in May, NFIB says
2023.06.13 07:23
© Reuters. A street vendor sells fruits near the red carpet as preparations for the Academy Awards continue in Los Angeles, California, U.S., March 25, 2022. REUTERS/Loren Elliott
WASHINGTON (Reuters) – U.S. small business confidence rebounded in May, but worries about the economy’s outlook and inflation remained, according to a survey released on Tuesday that also showed businesses still eager to hire more workers.
The National Federation of Independent Business (NFIB) said its Small Business Optimism Index rose 0.4 point to 89.4 last month. It was the 17th straight month that the index stayed below the 49-year average of 98.
The share of owners expecting better business conditions over the next six months slipped one point to a net negative 50%. A net negative 21% expected higher inflation-adjusted sales, down two points from April.
Twenty-five percent of small business owners reported that inflation was their single most important problem, up two points from April. The share was, however, 12 points lower than last July’s peak, which was the highest reading since the fourth quarter of 1979.
Despite the persistent worries about inflation, price pressures are subsiding as the aggressive interest rate hikes delivered by the Federal Reserve since March of 2022 cool demand.
Government data on Tuesday is expected to show the Consumer Price Index rose 0.2% in May after an increase of 0.4% in April, according to a Reuters survey of economists. In the 12 months through May, the CPI is forecast to climb 4.1%. That would be the smallest year-on-year gain since March of 2021 and would follow a 4.9% advance in April.
Economists expect the Fed will keep its policy rate unchanged on Wednesday for the first time in more than a year.
The NIFB survey showed 44% of owners reported job openings that were hard to fill, down a point from April. A net 19% planned to create new jobs in the next three months, up two points from April. About 63% reported hiring or trying to hire in May, up 3 points from April.
Strong hiring by small businesses partially explains the labor market’s resilience. The government reported this month that nonfarm payrolls increased by 339,000 jobs in May.
