Small-business confidence slipped in May, according to the National Federation of Independent Business. The optimism index dropped 0.6 points to 95.3, missing the 96.2 reading that economists polled by The Wall Street Journal had predicted. This decline signals growing stress among owners who manage nearly half of all private-sector jobs.

Rising fuel prices squeezed profit margins and dampened hiring plans for these firms. Because small businesses react more quickly to price swings and interest rate hikes than larger corporations, these fluctuations create immediate operational pressure. The current reading remains below the 52-year average of 98.0, showing a persistent gap in sentiment.

NFIB Chief Economist Bill Dunkelberg noted a divide in the business community. While some owners show enthusiasm for AI, other economic pressures continue to weigh on the broader outlook. This tension between technological optimism and immediate cost burdens limits the ability of smaller firms to expand their payrolls during this period.