The National Federation of Independent Business (NFIB) has reported a decline in small business optimism for September. The NFIB Small Business Optimism Index dropped by 2 points to 98.8, marking the first decrease in three months. Despite this decline, the index remains above its 52-year average of 98. Meanwhile, the Uncertainty Index rose by 7 points to 100, which is one of the highest readings in over five decades.
Bill Dunkelberg, NFIB Chief Economist, said that "optimism among small business owners decreased in September." He noted that while many business owners consider their businesses healthy, they face challenges such as rising inflationary pressures and slower sales expectations.
Key findings from the survey highlighted ongoing issues with supply chains and inflation. The percentage of owners raising average selling prices increased by 3 points to a net 24%. Additionally, a net 31% plan to increase prices over the next three months. Inflation was identified as the most significant problem by 14% of owners, up from August.
Supply chain disruptions affected 64% of small businesses, an increase from August's figures. A notable drop occurred in inventory stocks viewed as "too low," reaching a net negative 7%, the largest monthly decline recorded.
On a positive note, changes in actual earnings improved slightly, reaching levels not seen since December 2021. However, expectations for better business conditions fell significantly by 11 points to a net 23%.
Labor quality and taxes were tied as the top concerns for small business owners at 18%. The NFIB jobs report indicated that job openings remained difficult to fill for many businesses. Of those hiring or attempting to hire, a majority reported few qualified applicants.
Capital outlays have remained steady over recent months with no significant change in plans for future expenditures. Sales trends showed more firms reporting declines than gains recently.
Loan accessibility became more challenging with a net 7% finding it harder to secure loans compared to previous attempts. Interest rates on short-term loans averaged at 8.8%, reflecting an increase from August.
Overall assessments of business health showed little change; however, fewer owners felt it was a good time to expand their operations compared to August.
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