Small Business Optimism At Highest Since Early 2022 But Dovish Components

• The NFIB small business index surprisingly increased to 93.7 (cons 91.5) in July from 91.5, leaving optimism at its highest since Feb 2022.

However, the components offer some dovish implications for inflationary pressures. All seasonally adjusted figures below:

• The net share of business owners who raised average selling prices fell 5pts to 22%, the lowest since the 21% of Jan’24 and before that Jan’21. For perspective, it averaged 12.6% in 2019.
• The net share planning to increase average selling prices over the next three months meanwhile fell another 2pts to 24% for its lowest since Apr 2023. This is closer to the 21.4% averaged in 2019.
• On the labor side, the net 33% that raised compensation in July was down 5pts to its lowest since Apr'21 (2019 av 31.3%) and the net 18% planning to raise compensation over the next three months was down 4pts to return to May levels (2019 av 20.8%).
• There wasn’t much change in labor activity metrics: the net 38% reporting job openings as hard to fill was up 1pt from June but hovers close to recent lows and is near the 36.4% in 2019.
• Hiring plans meanwhile saw a third consecutive month at 15%, above lows of 11% from March but still below the 19% in 2019.