Minnesota State Wire

The National Federation of Independent Business (NFIB) has released its latest Small Business Optimism Index for May, which saw an increase of three points to 98.8, slightly above the long-term average of 98. This rise is attributed mainly to improved expectations for business conditions and sales. However, the Uncertainty Index also rose by two points to 94.

Bill Dunkelberg, NFIB Chief Economist, commented on the findings: “Although optimism recovered slightly in May, uncertainty is still high among small business owners.” He noted that while there are more positive expectations regarding business conditions and sales growth, significant uncertainties remain unresolved.

Jon Boesche, NFIB Minnesota State Director, highlighted the local sentiment: “Small business sentiment in Minnesota is on the rise, with many owners anticipating improved sales volumes in the coming months.” He added that despite this optimism, taxes continue to be a major concern for small businesses and stressed the importance of making the Small Business Deduction permanent.

Among key findings from the report:

- A net 1% of owners viewed current inventory stocks as "too low," marking a significant increase from April.

- Expectations for better business conditions rose by 10 points to a net 25%.

- Expectations for higher real sales volumes increased by 11 points to a net 10%.

- Capital outlay plans within six months were reported by 22% of respondents, up four points.

- Labor quality concerns fell slightly but remain significant at 16%.

The survey also revealed that inflation remains a consistent issue for 14% of respondents. The overall health of businesses showed mixed results with slight changes across various categories.

Regarding employment trends, a steady percentage of small business owners reported job openings they could not fill. While hiring intentions decreased marginally from April levels, labor costs have become increasingly concerning for some businesses.

In terms of financial aspects:

- Compensation increases were reported by a net 26%, though this was down from previous months.

- Capital expenditures were made by over half of the surveyed owners in recent months.

- Sales issues remained stable as a top problem at 9%.

Other insights include reports on financing difficulties and interest rates as ongoing challenges. Only a small percentage deemed it an ideal time to expand their operations.

Taxes emerged as the primary concern among small business owners at 18%, marking its highest rank since December 2020 when it was tied with labor quality concerns. Government regulations and competition from larger businesses also featured as notable issues but did not see significant changes from previous reports.

The data for this survey was collected throughout May and forms part of an ongoing series conducted by NFIB since 1973.