The Paychex Business Sentiment Report, a quarterly survey that measures business owner optimism and confidence, shows that navigating a complex and evolving regulatory landscape is the top challenge currently impacting business owners. In addition, tariffs are having a negative effect on the cost of supplies and materials for 27 percent of business owners, with the remaining 73 percent reporting no supply chain impact. The report was issued by Paychex, Inc., a leading provider of integrated human capital management solutions and services for human resources, payroll, benefits, and insurance services.

"Businesses, especially those in the small and mid-market, don't always know about or have the ability to quickly adapt to changing regulations. Tariffs can have a major impact as smaller companies often lack leverage when it comes to switching suppliers or passing along increased costs to customers," said Martin Mucci, Paychex president and CEO. "While we're encouraged to see that the majority of business owners are not affected at this time, we are keeping a close eye on the evolving trade regulations and small and mid-sized businesses."

According to the survey results, gathered via an online poll of 500 randomly selected business owners with 500 employees or less between August 1 and 13, business owners' optimism is trending up in every area – including business outlook, ability to raise wages, and access to capital – since the last report in March 2019. On a scale of 1-100 with 1 representing the highest level of pessimism and 100 representing the peak of optimism, business owners' overall outlook is up eight points to 73/100 since March (65/100), the highest it's been since the report debuted in October 2018.

Owners' confidence in the U.S. economy rose one point to 63/100 since March, yet marks the lowest level of optimism across all areas included in the survey. Business owners' confidence in their ability to raise wages increased by 26 points to 67/100.

"These results indicate a positive shift in business owner outlook as we head into the back half of 2019," Mucci added. "The uptick in their level of confidence in their ability to raise wages is consistent with our latest wage data, which shows hourly earnings have grown 2.61 percent year over year."

Other areas that saw a notable increase in business owner sentiment since the March 2019 report include:

Ability to make capital investments: up 21 points to 74/100

Ability to find new customers: up 12 points to 74/100

Access to capital: up 12 points to 76/100

"My overall business outlook is positive right now," said one survey respondent. "However, I do worry about how America's trade war with other countries will affect my business. I also fear that the U.S. will go through another economic recession."

According to another respondent, "My business is a startup, so the current economic outlook will definitely impact our ability to grow in the short-term and possibly for the first few years in business. The current business outlook does not make building a successful business impossible, just more difficult."