Prairie State Wire

The NFIB Small Business Optimism Index showed a notable increase in May, rising by three points to 98.8, slightly surpassing the 51-year average of 98. This improvement was primarily driven by more positive expectations for business conditions and sales. However, the Uncertainty Index also saw an uptick, climbing two points from April to reach 94.

Taxes emerged as the most pressing concern for small business owners, with 18% identifying it as their primary issue, marking an increase of two points from April. This marks the first time taxes have topped the list since December 2020.

NFIB Chief Economist Bill Dunkelberg commented on these developments, stating, "Although optimism recovered slightly in May, uncertainty is still high among small business owners." He added that while there are more positive expectations regarding business conditions and sales growth, major sources of uncertainty continue to impact the economy.

Noah Finley, NFIB Illinois State Director, highlighted the increasing burden of taxes on small businesses. "Taxes have risen to the top of small business concerns," he said. He expressed concern over potential additional statewide taxes being considered by the Illinois General Assembly to support Chicago-area transit systems and urged Congress to make permanent the 20% Small Business Deduction.

The report outlined several key findings: a net 1% of owners viewed inventory stocks as too low in May; a net 25% expected better business conditions; and a net 10% anticipated higher real sales volumes. Additionally, capital outlays are planned by 22% of respondents within six months.

Labor quality concerns decreased slightly to affect 16%, while inflation remained unchanged at 14%. In terms of employment challenges, a consistent 34% reported job openings they could not fill.

Regarding compensation trends, a net 26% reported raising wages in May despite a decline from April figures. Plans for future compensation increases rose modestly to a net 20%.

Capital expenditures were reported by 56%, with significant investments in equipment and vehicles noted. Sales issues persisted with poor sales remaining at a consistent concern level for five months.

Inventory gains held steady at negative levels seasonally adjusted. Price hikes were planned by a net 31%, reflecting an upward trend from April's data.

Profitability reports indicated struggles with weaker sales cited as a key factor behind declining profits for some businesses. Financing difficulties were noted by an increased percentage reporting higher interest rates on recent loans.

Despite these challenges, there was slight optimism about expansion prospects with an increased percentage considering it an opportune time for growth compared to previous months.

The NFIB Research Center has been gathering Small Business Economic Trends data through quarterly surveys since late-1973 and monthly surveys since mid-1986. The latest survey was conducted during May this year and released on June's second Tuesday.