Rushmore State News

The NFIB Small Business Optimism Index saw an increase of three points in May, reaching 98.8, which is slightly above the 51-year average of 98. The improvement in expected business conditions and sales expectations played a significant role in this rise. Meanwhile, the Uncertainty Index also rose by two points to 94.

Bill Dunkelberg, NFIB Chief Economist, commented on the situation: “Although optimism recovered slightly in May, uncertainty is still high among small business owners.” He added that while the economy continues to face challenges, there are more positive expectations regarding business conditions and sales growth.

Jason Glodt, NFIB South Dakota State Director, highlighted local impacts: “South Dakota’s small businesses are experiencing a slight boost in optimism, particularly regarding sales expectations.” However, he noted ongoing concerns about labor quality and taxes affecting the overall outlook. Glodt urged lawmakers to prioritize solutions for small businesses to support growth.

Key findings from the report include a net 1% of owners considering current inventory stocks as "too low," marking a seven-point increase from April and the highest reading since August 2022. The net percentage of owners expecting better business conditions rose by ten points to a net 25%. Additionally, there was an eleven-point rise in owners expecting higher real sales volumes.

Twenty-two percent plan capital outlays in the next six months—a four-point increase—while labor quality concerns dropped three points to 16%. Inflation remained a concern for 14% of owners. In terms of hiring challenges, 34% reported unfilled job openings, consistent with April's figures.

Labor costs were identified as the most significant problem by 9% of business owners. Compensation adjustments saw mixed trends; a net 26% reported raising compensation (a seven-point decrease), while a net 20% plan to do so within three months (a three-point increase).

Capital expenditures over the last six months were reported by 56%, down two points from April. Notably, investments included new equipment (40%), vehicles (26%), and facility improvements or expansions (15%).

Sales issues persisted with poor sales reported as a top problem by 9%, unchanged for five months. Inventory levels remained steady at a net negative 5%, with some fluctuations in stock increases and reductions.

Price hikes are anticipated by a net 31%, up three points from April. Profit trends were negative at a net negative 26%, with weaker sales cited as a primary factor.

Financing issues increased slightly with borrowing on regular basis reported by one-quarter of all owners. A higher rate on recent loans was noted by a net 7%.

Overall expansion plans showed slight improvement with ten percent considering it a good time to expand—up one point from April but historically low.

Taxes emerged as the top concern for small business owners at eighteen percent—the first time since December 2020 it ranked highest without sharing the spot with labor quality concerns.

The NFIB Research Center has been collecting data through quarterly surveys since late 1973 and monthly surveys since 1986. This survey was conducted among NFIB members in May 2025.