For six straight months, more U.S. small businesses have been raising wages than prices. That marks a return to the pre-pandemic trend and follows a rare reversal in 2021 and 2022.
A net 41% of firms in a monthly survey conducted by the National Federation of Independent Business said in May that they had recently boosted pay, according to data published Tuesday. Meanwhile a net 32% of respondents said they had recently raised prices, the smallest share in more than two years.
Net percentages reflect the share of firms reporting increases minus those reporting decreases.
The numbers suggest small businesses have returned to the pre-pandemic status quo of trying to find ways to avoid passing on higher labor costs to consumers. The inflationary environment of 2021 and 2022 had made it easier for them to raise the prices of goods and services without much resistance.
It’s another positive for the inflation outlook, too. Consumer price index figures out Tuesday showed inflationary pressures kept receding in May, and many analysts expect it to continue in the months ahead.
