The Sconi

The NFIB Small Business Optimism Index saw a rise of three points in May, reaching 98.8, which is slightly above the 51-year average of 98. The increase was primarily driven by expected business conditions and sales expectations. However, the Uncertainty Index also rose by two points to 94. Taxes were identified as the most significant problem for small business owners, with 18% citing it as their top concern, marking an increase of two points from April.

"Although optimism recovered slightly in May, uncertainty is still high among small business owners," said NFIB Chief Economist Bill Dunkelberg. "While the economy will continue to stumble along until the major sources of uncertainty are resolved, owners reported more positive expectations on business conditions and sales growth."

NFIB Wisconsin State Director Luke Bacher commented on local sentiments: "Wisconsin small business owners are feeling more optimistic about the future, with increased investment plans. However, the ongoing issues with taxation and labor quality are still top of mind for many. Congress must prioritize solutions, like making the Small Business Tax Deduction permanent. In Wisconsin, the legislature can lower the tax burden by returning a portion of the state’s surplus tax revenue. Both measures would ease the cost of doing business and encourage Main Street to grow."

Key findings from May's report include a net 1% (seasonally adjusted) of owners viewing current inventory stocks as "too low," up seven points from April—the highest reading since August 2022—and a net percent of owners expecting better business conditions rising ten points to a net 25%. The percentage planning capital outlays in the next six months rose four points to 22%, marking this year's highest reading.

Labor quality concerns fell three points to 16%, while inflation remained unchanged at 14% as a significant issue for businesses. Regarding job openings that could not be filled, figures remained constant at a seasonally adjusted 34%.

In terms of compensation trends, there was a decrease in those reporting raised compensation by seven points to a net 26%, while those planning raises increased by three points to a net 20%.

Capital expenditures saw some decline; only 56% reported such outlays over six months—a drop of two points from April and this year’s lowest figure.

For profit trends in May, reports showed a net negative outcome at -26%, five points worse than April figures. Financing concerns saw an increase with five percent identifying it as their main issue—up two points compared to April.

Finally, taxes re-emerged as a leading concern for small businesses for the first time since December 2020 when it last tied with labor quality.

The NFIB Research Center has been collecting data through its Small Business Economic Trends survey since late-1973 on a quarterly basis and monthly since 1986.