Small businesses adjust to the reopening normal
Small business owners' optimism pulled back slightly during May.
Why it matters: Small businesses were hit hard during the pandemic, but optimism had grown in each of the prior three months. The slight pullback last month appears to stem largely from hiring challenges — offering yet another data point on how labor issues are playing out across the country.
The details: The NFIB Small Business Optimism Index eased by 0.2 points in May, to 99.6, from April.
- The index is up from a reading of 95 in January, but down from 104 in the fall.
- The reading is about 2 points above the historical average.
What they’re saying: "This tells me that overall small business sentiment is still elevated, and we continue to see increases in consumer activity as things are opening up and spending gains,” Sharon Miller, head of small business at Bank of America, tells Axios.
Yes, but: Finding quality employees continues to be challenging.
- About 93% of those trying to hire reported few or no "qualified" applicants for the positions they were trying to fill.
- A net 34% of owners reported raising compensation in May, up 3 points from April. That’s the highest level of the past 12 months.
The bottom line: As the economy strengthens, small businesses are still forging ahead with their growth and reopening plans.
- About 27% plan to make capital outlays, steady from the prior month.
- And 27% plan to make hires, up from 21%.