Peace Garden News

The National Federation of Independent Business (NFIB) reported a decline in its Small Business Optimism Index for September, dropping by 2.0 points to 98.8. This marks the first decrease in three months, although the index remains above its 52-year average of 98. The Uncertainty Index increased by seven points from August to reach 100, one of the highest levels recorded in over five decades.

“Optimism among small business owners decreased in September,” said NFIB Chief Economist Bill Dunkelberg. “While most owners evaluate their own business as currently healthy, they are having to manage rising inflationary pressures, slower sales expectations, and ongoing labor market challenges. Although uncertainty is high, small business owners remain resilient as they seek to better understand how policy changes will impact their operations.”

NFIB North Dakota State Director Don Larson commented on local conditions: “Inflation is hitting North Dakota businesses and their customers hard. Nationwide, 24% small business owners have raised average selling prices, and we’re seeing this in North Dakota, too. If this trend continues, it will have a significant impact on the state’s economy.”

Key findings from the report indicate that supply chain disruptions and inflation remain major concerns for small businesses. In September, the net percentage of owners raising average selling prices rose by three points to a seasonally adjusted net 24%. Additionally, a net 31% plan to increase prices over the next three months—an increase of five points since August.

Fourteen percent of respondents identified inflation as their most important problem in operating their businesses due to higher input costs—a rise of three points from August. Supply chain disruptions affected 64% of small business owners in September, up ten points from the previous month.

Inventory levels also shifted notably; a net negative seven percent viewed current inventory stocks as “too low,” representing the largest monthly decline ever recorded by the survey.

Despite these challenges, some areas showed improvement. The measure tracking actual earnings changes increased by three points—the highest level since December 2021.

Expectations for better business conditions declined significantly: The net percentage fell by eleven points from August to a seasonally adjusted net negative twenty-three percent.

Labor issues continue to be significant for small firms; eighteen percent cited labor quality as their top concern—down three points—and tied with taxes as the leading single issue.

According to NFIB’s jobs report for September, thirty-two percent of all small business owners had job openings they could not fill—unchanged since August and remaining at historically high levels since July 2020. Of those hiring or attempting to hire (58%), eighty-eight percent reported few or no qualified applicants available. Hiring plans are at their highest level since January with a seasonally adjusted net sixteen percent planning new hires over the next quarter.

Labor costs were increasingly cited as problematic: eleven percent named them as their top issue (up three points), while thirty-one percent reported raising compensation (up two points). Nineteen percent plan further increases within three months—a slight decrease from last month.

Capital investment activity remained subdued; fifty-six percent made capital outlays during the past six months—unchanged from August—with equipment purchases being most common at forty-two percent among those investing.

Sales trends revealed more firms experienced declining sales than gains; however, there was a modest improvement compared with August figures.

Loan accessibility became more challenging: seven percent found obtaining loans harder than before—the highest rate this year—and interest rates on short-term loans averaged eight point eight percent after an increase from August’s rate.

Business health assessments remained steady overall: eleven percent rated their health as excellent (down slightly), while fifty-seven percent rated it good (up slightly).

Expansion intentions softened further; only eleven percent said now is a good time to expand operations—a relatively weak result compared with historical norms.

Taxes and labor quality each topped owner concerns at eighteen percent apiece. Fewer cited government regulations or competition from large companies as pressing issues compared with prior months.

Insurance costs were less frequently mentioned this month (eight percent), while financing and interest rates held steady at four percent citing them as primary problems.

The NFIB Research Center has been conducting its Small Business Economic Trends survey quarterly since late 1973 and monthly since 1986 using randomly selected members’ responses; results are published each month following data collection.