In May, confidence among U.S. small business owners reached its peak for the year, according to a survey released by the National Federation of Independent Business. The Small Business Optimism Index rose to 90.5 after dropping in March to its lowest level in over a decade. This increase comes on the heels of a report from the Labor Department showing stronger job growth than expected in May, highlighting the resilience of the labor market.
Despite this positive trend, small businesses continue to face challenges such as persistent inflation and high borrowing costs, which may be contributing to their cautious approach to wage increases and price raises. Only 18% of small business owners plan to boost compensation over the next three months – the lowest level since March 2021. Additionally, the number of businesses planning to raise prices rose by two points to 28%, with no change from April in terms of inflation concerns among small business owners.
The U.S. central bank is anticipated to maintain interest rates unchanged at the end of its two-day policy meeting on Wednesday, which could impact small businesses as they navigate the current economic landscape and continue to face these challenges.
