WASHINGTON, July 14 (Reuters) – U.S. small-business sentiment increased in June, but the share of owners reporting that inflation was their “single most important” problem was the highest in nearly two years, and more said they had raised average selling prices.
The National Federation of Independent Business said on Tuesday that its Small Business Optimism Index rebounded 2.1 points to 97.4 last month, approaching its 52-year average of 98.0. The survey’s uncertainty index fell 2 points to 89, remaining well above its historical average of 68.
The improvement in sentiment and easing in uncertainty likely reflected a retreat in gasoline prices as a fragile ceasefire between the U.S. and Iran came into effect. The truce, however, collapsed last week after commercial tankers came under fire in the Strait of Hormuz, triggering military strikes between the two countries.
Gasoline prices have been rising since, averaging $3.87 a gallon on Monday from $3.80 a week ago, data from motorist advocacy group AAA showed. Twenty-one percent of business owners cited inflation as their single most important business problem, up 3 points from May, and the highest level since October 2024.
The share reporting raising average selling prices increased 2 points to 38%, the highest reading since January 2023. It was the fourth straight month that the share has increased. But the share planning to raise prices over the next three months eased 2 points to 32%, supporting economists’ cautious optimism that inflation likely peaked in May.
The government is expected to report on Tuesday that the Consumer Price Index increased 3.8% on a year-over-year basis in June after surging 4.2% in May, which was the largest gain since April 2023, a Reuters survey of economists showed.
A MIX OF ENCOURAGING DEVELOPMENTS AND CHALLENGES
“Current economic conditions present small business owners with both encouraging developments and ongoing challenges,” said NFIB Chief Economist Bill Dunkelberg. “Lower fuel costs provide welcome relief for businesses as well as consumers, with firms anticipating improved operating conditions over the next six months.”
Small business employment eased for a fourth straight month, with the survey’s jobs index dipping to 100.2 from 100.3 in May.
The government this month reported a sharp moderation in job growth in June, with nonfarm payrolls for April and May revised considerably lower.
The share of small business owners reporting job openings they could not fill rose 3 points to 32% last month. The proportion planning to create new jobs in the next three months increased 2 points to 11%. There was a 7-point jump in the share saying they hired or tried to do so in June, with roughly half reporting few or no qualified applicants for the positions they were trying to fill, the biggest share since September 2024.
Some of the comments from survey respondents indicated that the high cost of living was contributing to the scarcity of workers, with one owner in the agricultural sector in Indiana saying “employees are struggling to find decent places to rent within their means and availability.” A retailer in California said “the high cost of housing makes it difficult to pay employees enough to live” in the state.
(Reporting By Lucia Mutikani; Editing by Mark Porter)
