Small business sentiment in the U.S. eased slightly in June as uncertainty remains elevated despite easing, and taxes remained a top concern for business owners, survey data from the National Federation of Independent Businesses showed on Tuesday.
The NFIB Small Business Optimism Index edged down 0.2 percentage points to 98.6. Economists had forecast a score of 98.7. The reading remained slightly above the 51-year average of 98.
A massive increase in respondents reporting excess inventories was the main reason behind the decline in the index, the NFIB said.
The Uncertainty Index fell five points to 89, while nineteen percent of small businesses reported taxes as their top concern, up one point from May. The last time the proportion of businesses reporting taxes are their main problem reached 19 percent was in July 2021, the NFIB said.
The survey also showed that businesses' expectations regarding better business conditions and higher sales volumes in the coming months eased. Plans for capital outlay were also scaled back slightly.
Signaling a continuous easing of inflation pressures on the Main Street, the share of small owners reporting inflation as their single most important problem fell by three points to 11 percent, the lowest since September 2021.
The NFIB survey observed "substantial deterioration" in small businesses' assessment of the overall health of their enterprises.
The share of small businesses reporting job openings that could not be filled rose by two points to 36 percent, and 86 percent of the 58 percent of owners trying to hire in June reported few or no qualified applicants. Meanwhile, the proportion of businesses planning to create new jobs in the next three months edged up by a point to 13 percent.
In June, 10 percent of small businesses reported labor costs as the single most important problem, up one point from May.
A net 33 percent reported raising compensation, up seven points from May and the largest monthly increase since January 2020, the NFIB said. Looking ahead, a net 19 percent of business owners plan to raise compensation in the next three months, down one point from May.