A measure of optimism among small business owners has climbed to its highest level of this year, but remains below its historical average.

The National Federation of Independent Business reported its Small Business Optimism Index rose a point between May and June to 91.5.

That’s the highest level since the index stood at 91.9 in December. However, the index has remained below its 50-year average of 98 for 30 consecutive months.

“Main Street remains pessimistic about the economy for the balance of the year,” said
Bill Dunkelberg, chief economist of the NFIB. “Increasing compensation costs has led to higher prices all around. Meanwhile, no relief from inflation is in sight for small business owners as they prepare for the uncertain months ahead.”

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

The proportion of NFIB members responding to the survey upon which the June index was based who expected the economy to improve rose five points between May and June. But at a net negative 25 percent, more members anticipated worsening conditions.

A net 23 percent of members planned capital outlays over the next six months, unchanged from a month ago. A net 4 percent said they consider now a good time to expand, also unchanged from May.

The share of members who expected increased sales held steady. But at a net negative 13 percent, more members anticipated decreased sales.

The proportion of members who anticipated increased earnings rose a point. But at a net negative
29 percent, more expected decreased earnings.

Among those reporting lower profits, 34 percent reported weaker sales, 17 percent cited higher material costs and 12 percent blamed increased labor costs. Among those reporting higher profits, 37 percent credited increased sales and 20 percent cited higher selling prices.

A net 15 percent of members reported plans to increase staffing, unchanged from a month ago. A net 37 percent reported hard-to-fill job openings, down five points. Of the 60 percent of members hiring or trying to hire in June, 85 percent reported few or no qualified applicants for the positions for which they trying to fill.

The share of members who planned to increase inventories rose four points. But at a net negative
2 percent, more planned to decrease inventories. A net negative 2 percent said current inventories were too low.

Asked to identify their single most important problem, 21 percent cited inflation and 19 percent the quality of labor. Another 14 percent cited taxes and 11 percent the cost of labor.

A net 27 percent of members reported increasing average selling pries. Price hikes were most frequent in the construction, retail and wholesale sectors. A net 38 percent of members reported raising compensation, while another 22 percent expected to do so in the next three months.