Small business sentiment saw a big upside surprise for the month of May. While economists were expecting the headline NFIB Small Business Sentiment Index to fall to 102.0 from last month’s reading of 103.5, the actual reading went the other way, rising to 105. That makes it four straight monthly gains after five straight months of losses from last August’s record high of 108.8.

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As we do each month, we wanted to highlight which issues are currently the biggest problems for small businesses. Leading the way once again this month, Quality of Labor is the biggest problem for businesses, impacting a quarter of all those surveyed. Behind Labor Quality, Taxes and Government Red Tape take up the number two and three spots, but both are well off their historical highs and Red Tape is now only cited by 12% of small businesses as their most important problem. That’s tied for the lowest reading since 2010!

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Along with Labor Quality, which was cited by 25% of all small business owners, another 8% cited the Cost of Labor as their most important problem. In other words, on a combined basis, labor issues are the biggest problems for one-third of all small business owners! In the history of the survey, there has only been one other month where the combined reading was as high as it is now (August 2018) and only a handful of other periods where it was above 30 (1998 – 2000 and since the second half of 2018).  

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