The NFIB Small Business Optimism Index increased by 2.2 points in October, reaching 93.7. Despite this rise, the index remains below the 50-year average of 98 for the 34th consecutive month. The Uncertainty Index also saw an increase, climbing seven points to a record high of 110.
NFIB Chief Economist Bill Dunkelberg commented on the current situation: “With the election over, small business owners will begin to feel less uncertain about future business conditions.” He noted that while optimism is increasing, challenges such as low sales and inflation persist.
The survey highlighted several key findings:
- A net negative 20% of owners reported higher nominal sales in recent months, marking the lowest reading since July 2020.
- A net 31% reported raising compensation, which decreased slightly from September and reached its lowest point since April 2021.
- Owners expecting higher real sales volumes rose to a net negative 4%, the highest level this year.
- Thirty-five percent of owners faced unfilled job openings in October.
- Inflation remains a primary concern for 23% of business owners.
In October's jobs report, it was found that many small businesses are struggling to fill positions due to a lack of qualified applicants. Additionally, capital outlays were reported by 54% of owners over the past six months.
Inventory levels also showed some changes. The percentage of owners reporting inventory gains rose slightly. Meanwhile, price hikes were most prevalent in sectors like finance and retail.
Compensation trends revealed that fewer businesses plan to raise wages compared to previous months. Labor costs and quality remain significant issues for many businesses.
Profit trends indicated mixed results with some blaming weaker sales or rising material costs for lower profits. However, those reporting higher profits often credited increased sales volumes or seasonal changes.
Finally, only a small percentage reported unmet borrowing needs or financing as their top issue.
The NFIB Research Center has been collecting data on small business economic trends through surveys since the late '70s. The latest survey reflects ongoing challenges and cautious optimism among small business owners as they navigate economic uncertainties.
