A measure of optimism among small business owners has edged up, but remains below its historical average as uncertainty over inflation, labor shortages and other problems persist.

The National Federation of Independent Business reported its Small Business Optimism Index rose four-tenths of a point between June and July to 89.9. The index has remained below its historical average of 98 for six straight months, however.

 “The uncertainty in the small business sector is climbing again as owners continue to manage historic inflation, labor shortages and supply chain disruptions,” said Bill Dunkelberg, chief economist of the NFIB. “As we move into the second half of 2022, owners will continue to manage their businesses into a very uncertain future.” 

The NFIB bases the index on the results of monthly surveys of members of the small business advocacy group, most of them small business owners. For July, six of the 10 components of the index decreased and four increased.

The proportion of NFIB members who responded to the survey upon which the July index was based who said they expect the economy to improve over the next six months rose nine points between June and July. The increase was the first this year. But at a net negative 52 percent, more of those who responded anticipated worsening economic conditions in the months ahead.

A net 22 percent of respondents reported plans for capital outlays, down a point. A net 4 percent said they consider now a good time to expand, up a point.

The share of those who reported plans to increase staffing rose a point to a net 20 percent. But a net 49 percent also reported unfilled job openings, down a point.

The proportion of respondents who said they expect increased sales fell a point to a net negative 29 percent.

A net 1 percent reported plans to increase inventories, up three points. A net 2 percent said current inventories were too low, down three points.

The share of those who expect increased profits fell a point to a net negative 26 percent. Among those reporting lower profits, 40 percent blamed the rising cost of materials and 17 percent cited weaker sales.

Asked to identify their single most important problem, 37 percent cited inflation. That’s an increase of three points from June and the largest proportion since the fourth quarter of 1979. Another 21 percent of respondents cited quality of labor.

A net 56 percent of respondents reported raising their average selling prices, down seven points from June. Price hikes were most frequent in the wholesale, manufacturing, construction and retail sectors.