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NFIB Price Plans Continue Reversal Of Q1 Strength, But Imply Limited PCE Moderation

US DATA
  • NFIB small business optimism surprisingly improved in June to 91.5 (cons 90.2) after 90.5.
  • It continues a recovery from the multi-year low of 88.5 in March and approaches the 92 level that it has struggled to break through since early 2022.
  • With inflation in focus ahead of Thursday’s CPI release, a net 27% reported increasing prices in June vs 25% in May.
  • More importantly meanwhile, price plans for the next three months saw a reversal of May’s modest increase, with a net 26% expecting to increase prices over the next three months after 28% in May.
  • This is the joint lowest for the year after 30%+ readings in 4Q23/1Q24 and leaves the smallest net share since late 2022/early 2023, but it’s still above the 21-22% average seen pre-pandemic.
  • It’s a level that currently suggests only limited further downward momentum in median PCE inflation of 3.25% Y/Y in May.

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