Optimism Turned up in June, but Outlook Is Still Dim
Source: Economics Group of Wells Fargo Bank, N.A.
Summary
Inflation Remains a Top Concern
Small business sentiment remains sour amid a downshift in economic momentum. The NFIB Small Business Optimism Index improved in June to 90.5. Although the index has risen for three consecutive months now, high uncertainty and poor economic outlooks have cemented the index below its 50-year average of 98. Retreating labor demand, weak sales growth and high interest rates all weighed on optimism in June. Receding price pressures was one silver lining of the report. However, inflation remained the top problem facing small businesses as the path back to 2% is slow-going.
Labor Demand Sinks Amid Uncertain Economic Outlook
- The NFIB Small Business Optimism Index perked up from 90.5 in May to 91.5 in June. After three consecutive improvements, the index is now sitting at its highest level this year.
- That said, small business sentiment is lukewarm at best. Small business owners hold generally poor views on the outlook for expansion, which has not budged over the past four months. Although the outlook for general business conditions posted a notable improvement in June, the index remains in firmly negative territory at -25%.
- Uncertainty regarding the economic outlook and presidential election also continue to weigh heavy on smaller firms. The uncertainty index fell back slightly in June but is still hovering at its highest level in three years