The Q2 MetLife and U.S. Chamber of Commerce Small Business Index reached its highest score since early 2020, rising to 69.5 from 62.3 last quarter. This index measures small business owners' perceptions of their business operations, environment, and expectations.
This surge in confidence is likely driven by growing optimism about the future business climate. Nearly three-quarters (73 percent) of small business owners expect their revenue to increase in the next year, the highest percentage since the survey began in 2017. Additionally, almost half (46 percent) anticipate increasing their investment in the next year, up 10 percentage points from last quarter and just one point below its all-time high in Q4 2022.
“Main Street employers are showing confidence and resiliency in the face of persistent inflation,” said Tom Sullivan, Vice President of Small Business Policy at the U.S. Chamber of Commerce. “Last quarter’s survey showed signs of confidence drifting upward with small businesses optimistic about revenues in the next 12 months. Main Street employers’ comfort with cash flow remains high and is a key reason why small business owners are bullish about their ability to meet customer demand and solve challenges facing their communities.”
Inflation remains the top concern for small business owners, with over half citing it as a major challenge for the eighth consecutive quarter. Perceptions of both the national and local economies are stable from last quarter but have risen 12 percentage points compared to a year ago.
“Small business owners’ continued adaptability and growing optimism is inspiring and a positive sign for the economy,” says Cynthia Smith, senior vice president, Regional Business at MetLife. “As these employers continue to invest in and hire for their businesses, they should take a holistic approach and explore solutions like voluntary benefits that can help build their culture and attract and retain top talent.”
The latest survey also explored small businesses’ views on artificial intelligence (AI), revealing a general optimism. Many small businesses are actively exploring and implementing AI tools, recognizing their potential benefits. Most small business owners believe hiring workers with AI skills could save them time (71 percent) and money (67 percent) in the long run. They see AI as a transformative skill for the workforce, with 65 percent expecting it to change job roles and 64 percent anticipating AI proficiency in future job postings. Furthermore, 74 percent agree that having employees who use AI tools could provide a competitive edge.
“I have read about 2,000 pages to learn more, assigned my senior team to the development of AI uses at our company, and we have begun to use it in lead generation, vendor identification, the development of marketing materials, and a few other applications,” says Michael Canty, president and CEO of Alloy Precision Technologies Inc.
As familiarity with AI tools grows, 40 percent of small businesses report having tried different AI tools to suit their needs, and nearly half (49 percent) plan to try AI tools in the next year.
CEOs identified the top risks impacting their industries as cyber threats, followed by geopolitical instability, and legal and regulatory uncertainty.
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