Prairie State Wire

The NFIB Small Business Optimism Index experienced a slight decline in June, dropping by 0.2 points to 98.6, which remains slightly above the long-term average of 98. The decrease was primarily influenced by an increase in respondents reporting excess inventories. Meanwhile, the Uncertainty Index saw a reduction of five points from May, reaching 89.

"Small business optimism remained steady in June while uncertainty fell," stated NFIB Chief Economist Bill Dunkelberg. "Taxes remain the top issue on Main Street, but many others are still concerned about labor quality and high labor costs."

NFIB Illinois State Director Noah Finley highlighted the emergence of taxes as a primary concern for small businesses: "With concerns over inflation fading, taxes have emerged as the number one issue for small businesses." He noted that small business owners are closely monitoring tax discussions at both state and federal levels.

Key findings from the report indicate that a net negative 5% of owners considered their inventory stocks "too low" in June, down six points from May. This reflects an overall increase in inventories. Additionally, expectations for better business conditions dropped three points to a net 22%, though this remains positive compared to historical averages.

Concerns about labor quality persisted with 16% of owners identifying it as their most significant problem, unchanged from May. Inflation concerns decreased with only 11% citing it as their main issue, marking the lowest level since September 2021.

The report also revealed that job openings were difficult to fill for 36% of small business owners in June, up two points from May. A net 13% plan to create new jobs within three months.

Regarding compensation trends, a net 33% reported raising compensation—a notable increase—and a net 19% plan further increases soon.

In terms of sales and pricing dynamics, poor sales were identified as the top problem by 10% of owners. A net negative percentage reported higher nominal sales recently; however, plans to raise prices reached their highest level since March last year.

Overall profit trends showed some improvement with fewer reports of negative profit trends compared to May. Financing issues were less prevalent with only three percent citing it as their main concern.

The survey was conducted by NFIB's Research Center among its members and released monthly on the second Tuesday.