US small business optimism rises, but so does uncertainty

11th Jun 2024 11:01

(Sharecast News) - Small business optimism in the United States rose to a five-month peak in May, but uncertainty was at its highest levels in three and a half years, according to the National Federation of Independent Business (NFIB).

The NFIB Small Business Optimism Index rose to 90.5 last month, up marginally from the 89.7 reading in April and ahead of the 89.8 consensus estimate.

While this was the highest reading since December 2023, it was still the 29th straight month below the historical average level of 98, according to the NFIB.

Meanwhile, the Uncertainty Index rose nine points to 85, its highest reading since November 2020.

Small business owners' plans to hire rose three points to a net 15%, the highest reading so far this year, but the share that are planning to raise compensation in the next three months fell three points to a net 18% - the lowest reading since March 2021.

The NFIB said that views about future business conditions are at the worst levels in 50 years, capital spending remains "anaemic", while the government's share of GDP has grown.

"Unsustainable debt levels, including the national debt, risk destabilising events in financial markets. And, the election promises to bring major changes in the tax and regulatory environment, regardless of who wins. All of this presents a very uncertain outlook for small business owners and uncertainty is the enemy of progress," the agency said.