The NFIB Small Business Optimism Index experienced a slight increase of 0.3 points in September, reaching 91.5. Despite this rise, the index remains below the 50-year average of 98 for the 33rd consecutive month. The Uncertainty Index saw a significant jump of 11 points to 103, marking its highest recorded level.
NFIB Chief Economist Bill Dunkelberg commented on the situation: “Small business owners are feeling more uncertain than ever.” He noted that this uncertainty is causing hesitation among owners regarding capital spending and inventory investments due to ongoing inflation and financing costs.
Key findings from the survey include a decrease in reported inventory gains, which fell by four points to a net negative 13%, marking the lowest level since June 2020. Additionally, the average rate paid on short maturity loans increased to 10.1%, reaching levels not seen since February 2001.
Employment challenges persist, with thirty-four percent of small business owners reporting unfilled job openings, down six points from August and at its lowest since January 2021. Furthermore, a net twelve percent of owners reported paying higher rates on recent loans.
Capital outlays have also declined; fifty-one percent of owners reported such expenditures in the past six months, a drop from August figures and comparable to July 2022 levels. Among those making expenditures, investments were primarily directed towards new equipment (35%), vehicles (23%), and facility improvements or expansions (15%).
Sales performance has been challenging as well, with a net negative seventeen percent of owners reporting higher nominal sales over the past three months. However, expectations for future real sales volumes rose slightly.
Inflation continues to be a major concern for small businesses; twenty-three percent identified it as their primary issue despite a slight decrease from August figures. Price hikes were notably prevalent in finance, retail, transportation, and construction sectors.
Labor costs remain an issue for nine percent of respondents while labor quality was cited by seventeen percent as their top problem after inflation.
Profit trends showed some improvement with reports of positive profit trends increasing slightly compared to August figures. Reasons for lower profits included weaker sales and rising material costs.
Credit conditions appeared stable with only two percent indicating unsatisfied borrowing needs while most respondents felt their credit needs were met or had no interest in borrowing.
The NFIB Research Center has been collecting data on small business economic trends through quarterly surveys since late 1973 and monthly surveys since 1986. This particular survey was conducted during September 2024.
