Optimism faded modestly in June, with the Small Business Optimism Index slipping 1.7 points to 103.3, reversing the gain posted in May but still leaving optimism at historically high levels. The main driver came from the inventory sector, with owners marking existing stocks as very “lean” and planning to add to them. Sales and earnings trends softened, expected credit conditions remained favorable. Uncertainty levels increased, as expectations for sales gains and general business conditions faded.
Some “tariff” Inflation pressures may be surfacing as the percentage of firms raising selling prices rose significantly with 30% of owners reporting recent changes in China trade policy negatively impacting their business. Job openings and plans to create jobs weakened a bit but remain historically very strong. Reports of higher worker compensation also cooled.