U.S. small-business confidence improved in August as worries about inflation subsided and demand for workers remained strong despite the uncertainty shrouding the economy, a survey showed on Tuesday.
The National Federation of Independent Business (NFIB) said its Small Business Optimism Index increased 1.9 points to 91.8 this month, reversing some of the deterioration suffered in the first half of the year.
Twenty-nine percent of owners reported that inflation was their single most important problem in operating their business, down 8 points from July’s reading, which was the highest share since the fourth quarter of 1979. That mostly reflects falling commodity prices, especially oil, which have resulted in gasoline prices retreating from record highs.
Businesses are also starting to see some light at the end of the tunnel, but concerns about a recession linger. The share of owners expecting better business conditions over the next six months increased 10 points from July to a still negative 42%, the highest reading since February.
The Federal Reserve’s aggressive interest rate increases to tame inflation have fueled fears of an economic downturn next year. The NFIB’s Uncertainty Index rose 7 points to 74 in August. For now, that has not diminished businesses’ desire for labor as they seek to expand their operations.
The survey showed a still-historically high 49% of owners reported job openings they could not fill last month, unchanged from July. That fits in with government data last month showing 11.2 million job openings on the last day of July, with two vacancies for every unemployed person.
Businesses also remained keen on capital and inventory investment over the next six months.