A measure of optimism among small business owners has increased, although concerns over labor shortages persist.
The National Federation of Independent Business reported its Small Business Optimism Index rose 2.9 points to 102.5 in June. It’s the first time the index has topped 100 since November. The average reading fo the 47-year-old index is 98.
“Small business optimism is rising as the economy opens up, yet a record number of employers continue to report that there are few or no qualified applicants for open positions,” said Bill Dunkelberg, chief economist of the NFIB.
“Owners are also having a hard time keeping their inventory stocks up with strong sales and supply chain problems,” Dunkelberg said.
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 June, seven of 10 components of the index advanced and three retreated.
The proportion of those who responded to the survey upon which the June index was based who said they expect the economy to improve jumped 14 points from May. But at a net negative 12 percent, more respondents indicated they still expect worsening conditions.
A record 11 percent of respondents said they plan to increase inventories, up five points. Meanwhile, a net 11 percent said current inventories are too low, up three points.
A net 25 percent reported plans to make capital outlays, down two points. A net 15 percent said they consider now a good time to expand, up two points.
A net 7 percent said they expect higher sales, up five points.
The proportion of those reporting higher earnings rose six points. But a net negative 5 percent, more reported lower earnings. Among those reporting higher earnings, 66 percent credited increased sales and 9 percent cited higher prices. Among those reporting lower earnings, 35 percent blamed lower sales and 25 percent cited increased materials costs.
A net 28 percent of those who responded to the survey reported plans to increase employment, up a point.
At the same time, though, a net 46 percent reported unfilled job openings, off two points from the record set in May. Asked to identify their single most important business problem, 26 percent cited labor quality and 8 percent cited labor costs.
A record-high 39 percent of respondents reported raising compensation, and 26 percent said they plan to raise compensation in the next three months.