In the month of May, inflation continued to be reported as a leading issue for small business owners, as persistently remained above the Federal Reserve’s two percent target while the labor market has continued to outperform expectations, although there are some signs of slowing. Despite the signs of a slowdown in the labor market, more than nine in ten small business owners reported few or no qualified applicants for positions they were trying to fill. The Consumer Price Index (CPI) data, released earlier this month, showed the inflation rate is currently sitting at 3.4 percent year over year, down slightly from last month and lower than forecast. Core CPI, which excludes the more volatile measurements of food and energy, increased by 0.3 percent. 22 percent of small business owners reported inflation as their top problem, down slightly from last month, with the net percentage of owners raising prices falling three points from March to a net 25 percent. While the National Federation of Independent Business (NFIB) monthly Small Business Optimism Index rose by 1.2 points to 89.7, it marks 28 consecutive months spent below the 50-year average of 98. In addition to contending with persistent inflation, net sales expectations are at net negative 12 percent, signaling a potential slowdown for small businesses in the coming months. While the most recent CPI report showed a pause in rising inflation, it will have to be seen if it will continue falling or resume its upward trend. Regardless of when inflation begins to decline, the Federal Reserve will need to see an established trend before beginning rate cuts, delaying them to the second half of this year at the earliest.

The below May 2024 Small Business Snapshot features numbers and updates to provide more insight into the current small business economy.

MAIN STREET MEASUREMENTS:

CONSUMER PRICE INDEX (INFLATION)

• The prices consumers paid for goods and services increased 0.3 percent in April as compared to March and totaled a 3.4 percent increase when measured over the last 12 months.

PRODUCER PRICE INDEX

• Wholesale prices rose 0.5 percent in April and had an increase of 2.2 percent year over year.

JOB OPENINGS

• At the end of March, businesses were unable to fill 8.5 million jobs, 3.3 million workers quit their jobs, and the number of layoffs and discharges changed little.

UNEMPLOYMENT RATE

• 175,000 jobs were created in April, and the unemployment rate rose slightly to 3.9 percent.

LABOR FORCE PARTICIPATION RATE

• The labor force participation rate remained unchanged at 62.7 percent in April.

UNEMPLOYMENT INSURANCE WEEKLY CLAIMS

• For the week ending May 11, 2024, the Department of Labor reported that initial unemployment claims were 222,000, a decrease of 10,000 from the previous week’s level.

  • The 4-week moving average of initial claims totaled 217,750, up slightly from the previous week’s average.

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