US Small Business Confidence Falls in June Amid Trade Tensions and Inventory Concerns

US small businesses' confidence fell in June due to excess inventory and decreased sales optimism amidst ongoing trade tensions and declining business health. The National Federation of Independent Business (NFIB) reported a 2-point drop in its Small Business Optimism Index to 98.6. A significant increase in businesses reporting excessive inventories and declining sales expectations contributed to the decline.

US small businesses faced a slight dip in confidence in June, according to the latest data from the National Federation of Independent Business (NFIB). The NFIB Small Business Optimism Index fell 0.2 percentage points to 98.6, remaining slightly above the 51-year average of 98. This decline was driven by a significant increase in businesses reporting excessive inventories and a decrease in sales optimism [2].

The NFIB Small Business Optimism Index, which measures small business owners' expectations for the economy and their own businesses, has been relatively steady but has seen a notable uptick in concerns about inventory levels. The Uncertainty Index, which measures the degree of uncertainty about the future, fell by five points to 89, indicating a slight easing of economic uncertainty [2].

Taxes remained the top concern for small business owners, with 19% reporting them as their single most important problem, up one point from May. This is the highest proportion since July 2021. Additionally, 36% of small businesses reported job openings that could not be filled, with 86% of those trying to hire reporting few or no qualified applicants [2].

The survey also showed that businesses' expectations regarding better business conditions and higher sales volumes in the coming months eased. Plans for capital outlay were also scaled back slightly. Inflation, while still a concern, fell to the lowest level since September 2021, with 11% of small owners reporting it as their single most important problem [2].

Overall, the report suggests that while small businesses remain optimistic about their own businesses, they are cautious about the broader economic outlook. The slight decline in confidence may be due to ongoing trade tensions, declining business health, and increased concerns about labor quality and high labor costs [2].

References:
[1] https://www.businesswire.com/news/home/20250702375495/en/June-Sales-at-Small-Businesses-Rise-from-Last-Year-but-Consumers-Pulled-Back-Compared-to-May
[2] https://forex.tradingcharts.com/international_financial_news/us_small_business_confidence_erodes_07082025_0223.html
[3] https://www.nfib.com/news/press-release/new-nfib-survey-small-business-optimism-remains-steady-in-june/