US Small Business Sentiment Rises to Six-Month High in June

• U.S. small-business confidence increased to a six-month high in June, but inflation worries lingered amid a rise in the share of owners planning to raise compensation for workers over the next three months. The National Federation of Independent Business (NFIB) said on Tuesday that its Small Business Optimism Index climbed 1 point to 91.5 last month, the highest level since last December.
• Nonetheless, June marked the 30th straight month that the index stayed below the 50-year average of 98 as inflation concerns remained on the radar and higher borrowing costs weighed on capital investment. A net 22.0% of businesses planned to increase compensation in the next three months, up 4 points from May. That was despite 37.0% of owners reporting job openings they could not fill, down 5 points from May.
• The NIFB, however, noted that the labour market remained tight in the construction, transportation, and retail sectors. About 16.0% of businesses reported unfilled positions for unskilled labor, an increase of 2 points from the prior month. In contrast, the share of owners reporting open vacancies for skilled workers dropped 6 points to 31.0%. Job creation plans were unchanged.
• Government data on Thursday will likely show consumer prices nudging up 0.1% in June after being unchanged in May, according to a Reuters survey of economists. The annual increase in consumer inflation is forecast to have slowed to 3.1% in June from 3.3% in May.
• Higher borrowing costs are constraining capital expenditure, with the share of small businesses reporting capital outlays in the last six months dropping 6 points to 52.0%, the lowest level since August 2022. The proportion of planning capital outlays over the next six months was unchanged at 23.0%.

(Source: Reuters)