Small Business Confidence Slips as Costs Rise and Hiring Cools — Evening Brief – 06.09.26
Small business confidence weakened in May as rising inflation concerns, escalating labor costs and renewed supply chain disruptions weighed on business owners, according to the latest survey from the National Federation of Independent Business.
The NFIB Small Business Optimism Index fell 0.6 points to 95.3, remaining below its 52-year average of 98.0. Meanwhile, the Uncertainty Index rose three points to 91, well above its historical average of 68, underscoring growing concerns about the economic outlook.
“AI investment spending has contributed to some excitement in the economy,” said NFIB Chief Economist Bill Dunkelberg. “Despite the enthusiasm around AI, the overall picture is divided. More small business owners are struggling with significant and unpredictable hikes in fuel prices, which are more challenging for small businesses to pass on to their customers compared to their larger corporate competitors.”
Labor market indicators continued to soften. The NFIB Small Business Employment Index edged down to 100.3 from 100.4 in April, marking its third consecutive monthly decline. A seasonally adjusted 29% of owners reported job openings they could not fill, down five points from April and the lowest level since May 2020.
Hiring plans also weakened, with a net 9% of owners planning to create new jobs over the next three months, down four points from April and likewise the lowest reading in six years.
At the same time, labor costs surged as a growing concern. Fourteen percent of owners identified labor costs as their most important business problem, the highest reading in the survey’s history. Inflation ranked second, cited by 18% of respondents, up two points from April.
Price pressures continued to build. A net 36% of owners reported raising average selling prices in May, the highest level since March 2023, while 34% plan to raise prices in coming months. Capital spending plans also weakened, with only 16% of owners intending to make capital outlays in the next six months, the lowest reading since March 2009.