The NFIB Small Business Optimism Index decreased by 2.5 points in August, settling at 91.2 and undoing July’s progress. This marks the 32nd consecutive month below the long-term average of 98 over the past five decades. The Uncertainty Index climbed to 92, its highest since October 2020. Inflation remains a significant concern for small business owners, with 24% identifying it as their primary challenge, a slight decrease from July.
“The mood on Main Street worsened in August, despite last month’s gains,” stated NFIB Chief Economist Bill Dunkelberg. “Historically high inflation remains the top issue for owners as sales expectations plummet and cost pressures increase. Uncertainty among small business owners continues to rise as expectations for future business conditions worsen.”
NFIB State Director Don Larson expressed concern about this decline: “The Small Business Optimism Index’s recent drop is deeply concerning,” he said. “North Dakota’s small business owners are facing significant challenges due to rising inflation and costs, as well as the potential expiration of the small business deduction next year. Now more than ever, we must work together to promote policies that support our small businesses.”
Key findings include negative trends in profit reports and sales volume expectations contributing significantly to the optimism index decline. A net negative 37% of owners reported positive profit trends, marking a low point since March 2010.
Regarding employment, a seasonally adjusted 40% of small business owners reported unfilled job openings in August, up two points from July. Among those hiring or attempting to hire, 90% noted a lack of qualified applicants.
Capital expenditure saw an increase with 56% reporting outlays in the last six months; spending was primarily on new equipment (40%), vehicles (21%), and facility improvements (18%). Additionally, plans for future capital outlays increased slightly.
In terms of pricing strategies, there was a slight decrease in the number of owners raising average selling prices compared to July. Price hikes were notably prevalent across finance, retail, construction, and manufacturing sectors.
Labor costs remained a critical issue for some businesses alongside inflation concerns.
A minority of owners experienced difficulties meeting borrowing needs or acquiring loans under favorable terms.
This data is part of ongoing research by the NFIB Research Center which has been collecting economic trends through quarterly surveys since late 1973 and monthly surveys since 1986.
