The NFIB Small Business Optimism Index experienced a decline of 2.5 points in August, settling at 91.2 and erasing July’s gains. This marks the 32nd consecutive month the index has remained below the 50-year average of 98. Additionally, the Uncertainty Index climbed to 92, reaching its highest level since October 2020. Inflation persists as the leading challenge for small business owners, with 24% citing it as their primary concern, a decrease of one point from July.
NFIB Chief Economist Bill Dunkelberg commented, “The mood on Main Street worsened in August, despite last month’s gains. 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, stating, “The Small Business Optimism Index’s recent drop is deeply concerning. 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 from the report include a net negative 37% of owners reporting positive profit trends, seven points worse than July, and the lowest figure since March 2010. The percentage of owners identifying inflation as the primary problem fell one point to 24%. Additionally, the net percentage of owners expecting higher real sales volumes decreased by nine points to a net negative 18%. A seasonally adjusted net 20% plan to raise compensation in the upcoming three months, which is an increase of two points from July.
In the employment sector, 40% of business owners reported unfulfilled job openings, a rise of two points from July. Among those hiring in August, 90% reported difficulty finding qualified applicants. In terms of capital outlays, 56% of owners made expenditures in the last six months, with 40% spending on new equipment, 21% on vehicles, and 18% on facility improvements or expansions.
The survey also found that a net negative 16% of owners reported higher nominal sales in recent months. The report showed unchanged levels in inventory gains at a net negative 9% seasonally adjusted. Price adjustments saw 24% of owners citing inflation as a significant issue, while a net 25% planned price hikes in August.
Additionally, the financing sector reported that 4% of owners found it to be their top problem in August, up one point from July. Meanwhile, 3% indicated their borrowing needs were not fully met, 26% felt all credit needs were satisfied, and 60% were uninterested in loans.
The NFIB Research Center has been tracking Small Business Economic Trends data through quarterly surveys since 1973 and monthly surveys starting in 1986. The August 2024 survey results were released on the second Tuesday of September.
