WASHINGTON — The National Federation of Independent Business (NFIB) Small Business Optimism Index decreased half of a point in September to 90.8. the organization reports. September’s reading marks the 21st consecutive month below the 49-year average of 98. The study found that 23% of owners reported that inflation was their single most important problem in operating their business, unchanged from August and tied with labor quality as the top concern.
“Owners remain pessimistic about future business conditions, which has contributed to the low optimism they have regarding the economy,” says Bill Dunkelberg, NFIB Chief Economist. “Sales growth among small businesses have slowed and the bottom line is being squeezed, leaving owners few options beyond raising selling prices for financial relief.”
Key findings of the study include:
- Small-business owners expecting better business conditions over the next six months deteriorated six points from August to a net negative 43% seasonally adjusted, however, 18 percentage points better than last June’s reading of net negative 61% and definitely at recession levels.
- Forty-three percent (seasonally adjusted) of owners reported job openings that were hard to fill, up three points from August and remaining historically high as owners can’t hire enough workers due to few qualified applicants.
- Seasonally adjusted, a net 23% plan to raise compensation in the next three months, down three points from August.
- The net percent of owners raising average selling prices increased two points to a net 29% seasonally adjusted — still a very inflationary level.
- According to NFIB’s jobs report, 43% (seasonally adjusted) of all small business owners reported job openings they could not fill in the current period, up three points from August. Owners’ plans to fill open positions remain elevated, with a seasonally adjusted net 18% planning to create new jobs in the next three months.
The study reports that 57% of owners reported capital outlays in the last six months. Of those making expenditures, 41% reported spending on new equipment, 22% acquired vehicles, and 17% improved or expanded facilities. Twelve percent of owners spent money on new fixtures and furniture and 7% acquired new buildings or land for expansion. Twenty-four percent of owners plan capital outlays in the next few months.
A net negative 8% of all owners (seasonally adjusted) reported higher nominal sales in the past three months, up six points from August’s lowest reading since August 2020. The net percent of owners expecting higher real sales volumes improved one point to a net negative 13%.
The net percent of owners raising average selling prices increased two points from August to a net 29% seasonally adjusted. Twenty-three percent of owners reported that inflation was their single most important problem in operating their business, unchanged from last month and tied with labor quality as the top problem.
Seasonally adjusted, a net 36% reported raising compensation in September. A seasonally adjusted net 23% plan to raise compensation in the next three months, down three points from August. Nine percent of owners cited labor costs as their top business problem, up one point from August. Twenty-three percent said that labor quality was their top business problem, down one point.
The frequency of reports of positive profit trends was a net negative 24%, up one point from August. Among owners reporting lower profits, 29% blamed weaker sales, 20% blamed the rise in the cost of materials, 15% cited labor costs, 8% cited lower prices, 7% cited the usual seasonal change, and 6% cited higher taxes or regulatory costs. For owners reporting higher profits, 55% credited sales volumes, 22% cited usual seasonal change, and 9% cited higher selling prices.
About the Study
The NFIB Research Center has collected Small Business Economic Trends data with quarterly surveys since the fourth quarter of 1973 and monthly surveys since 1986. Survey respondents are randomly drawn from NFIB’s membership. The report is released on the second Tuesday of each month. This survey was conducted in September 2023.
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