In the month of June, small business owners continued to identify inflation as the single most important problem for them in operating their business, as upward price pressures continue to increase expenses and lower profitability. In addition to inflation remaining a top problem for small businesses, a persistently strong labor market is making it more difficult for small businesses to fill openings, with 42 percent of owners reporting openings they could not fill. The Consumer Price Index (CPI) data, released earlier this month, showed the inflation rate declined slightly to 3.3 percent year over year, lower than originally forecast. Core CPI, which excludes the more volatile measurements of food and energy, held steady from last month. While the National Federation of Independent Business (NFIB) monthly Small Business Optimism Index rose by 0.8 points to 90.5, it marks the 29^th consecutive month spent below the 50-year average of 98. The Uncertainty Index also rose by nine points to 85, the highest reading seen since November 2020, signaling rising unease amongst small businesses. There is some hope for small businesses on the horizon if inflation continues to trend lower, but prices are already over 20 percent higher than they were just four years ago. While the most recent CPI report showed a decline in inflation, the Federal Reserve will need to see consistent data showing a downward trend before taking action. The Federal Reserve has already reduced their forecast rate cuts for the year, penciling in just one rate cut for 2024, down from three cuts forecast in March of this year when it seemed likely that inflation would continue to consistently decline. This means that small business owners who are waiting for a drop in interest rates to make investments will likely be waiting till 2025 for meaningful relief from elevated rates.

The below June 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 were unchanged in May as compared to April and totaled a 3.3 percent increase when measured over the last 12 months.

PRODUCER PRICE INDEX

• Wholesale prices declined 0.2 percent in May and had an increase of 2.2 percent year over year.

JOB OPENINGS

• At the end of April, businesses were unable to fill 8.1 million jobs, 3.5 million workers quit their jobs, and the number of layoffs and discharges changed little.

UNEMPLOYMENT RATE

• 272,000 jobs were created in May, and the unemployment rate rose slightly to 4 percent.

LABOR FORCE PARTICIPATION RATE

• The labor force participation rate declined to 62.5 percent in May.

UNEMPLOYMENT INSURANCE WEEKLY CLAIMS

• For the week ending June 8, 2024, the Department of Labor reported that initial unemployment claims were 242,000, an increase of 13,000 from the previous week’s level.

  • The 4-week moving average of initial claims totaled 227,000, up slightly from the previous week’s average.

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