A monthly measure of optimism among small business owners has increased, but still reflects concerns over inflation and labor shortages.

“Halfway through the year, small business owners remain very pessimistic about future business conditions and their sales prospects,” said Bill Dunkelberg, chief economist of the National Federation of Independent Business. “Inflation and labor shortages continue to be great challenges for small businesses. Owners are still raising selling prices at an inflationary level to try to pass on higher inventory, labor and energy costs.”

The NFIB reported its Small Business Optimism Index rose 1.6 points between May and June. But at 91, the index remained below its 49-year average of 98 for an 18th consecutive month.

The NFIB bases the index on the results of monthly surveys of members of the small business advocacy organization, most of them small business owners.

Between May and June, five of 10 components of the index advanced, four retreated and one remained unchanged.

The proportion of members responding to the survey upon which the June index was based who expect the economy to improve over the next six months rose 10 points. But at a net negative 40 percent, more members anticipated worsening conditions.

A net 25 percent of members reported plans for capital outlays, unchanged from May. A net 6 percent said they consider now a good time to expand, up three points.

The share of members who said they expect increased sales rose seven points. But at a net negative 14 percent, more forecast decreased sales.

Expectations for earnings rose two points to a net negative 24 percent. Among those those reporting lower profits, 28 percent blamed weaker sales and 24 percent cited rising materials costs.

A net 15 percent of members reported plans to increase staffing, down four points from May. A net 42 percent reported hard-to-fill job openings, down two points. Among those trying to hire employees, 92 percent reported few or no qualified applicants.

A net 36 percent of owners reported raising compensation, down five points from May. A net 22 percent said they expect to raise compensation in the next three months.

The share of members reporting plans to increase inventories fell a point to a net negative 3 percent. The proportion of those who said current inventories are too low fell a point to a net negative 4 percent.

Asked to identify their single most important problem, inflation and quality of labor tied as the top responses at 24 percent for each. Taxes came in next at 15 percent.

A net 29 percent of owners reported raising average selling prices, the lowest proportion since March 2021.