In the month of July, small business owners continued to identify inflation as the single most important problem for them in operating their business, as elevated inflation continues to increase expenses and lower profitability. In addition to inflation remaining a top problem for small businesses, a persistently strong labor market has continued to make it more difficult for small businesses to fill openings, with 37 percent of owners reporting openings they could not fill, down five points from last month but continuing to exert pressure on owners. The Consumer Price Index (CPI) data, released earlier this month, showed the inflation rate declined slightly to 3.0 percent year over year, lower than originally forecast. Core CPI, which excludes the more volatile measurements of food and energy, rose slightly by 0.1 percent from last month. The National Federation of Independent Business (NFIB) monthly Small Business Optimism Index rose by one point to 91.5, marking the highest reading seen all year, but the 30^th consecutive month spent below the 50-year average of 98. The Uncertainty Index fell by nine points to 82, still very elevated and remaining at a level not seen since November 2020, signaling rising unease amongst small businesses. While this month’s CPI report provides some hope for small businesses, the PPI report came in higher than expected, rising 0.2 percent from last month. While the most recent CPI report showed a decline in inflation, the Federal Reserve will need to see consistent data across the board showing a downward trend before acting. The Federal Reserve is now only forecasting one rate cut for 2024, down from three cuts forecast in March of this year when inflation seemed to be consistently declining. Recent data is providing some hope for the first rate cut to come potentially in September, however any change in the trend could push it further out.

The below July 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 declined 0.1 percent in June as compared to May and totaled a 3.0 percent increase when measured over the last 12 months.

PRODUCER PRICE INDEX

• Wholesale prices increased 0.2 percent in June and had an increase of 2.6 percent year over year.

JOB OPENINGS

• At the end of May, 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

• 206,000 jobs were created in June, and the unemployment rate rose slightly to 4.1 percent.

LABOR FORCE PARTICIPATION RATE

• The labor force participation rate rose slightly to 62.6 percent in June.

UNEMPLOYMENT INSURANCE WEEKLY CLAIMS

• For the week ending July 6, 2024, the Department of Labor reported that initial unemployment claims were 222,000, a decrease of 17,000 from the previous week’s level.

  • The 4-week moving average of initial claims totaled 233,500, down slightly from the previous week’s average.

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