In September, optimism among small businesses in the United States remained largely unchanged, according to a recent survey by the National Federation of Independent Business (NFIB). However, the survey also highlighted an unprecedented level of uncertainty, attributed to economic concerns and the impending election.
The NFIB Small Business Optimism Index edged up slightly by 0.3 points, reaching 91.5, falling short of the economists' forecast of 92.0. For the 33rd consecutive month, this metric fell below the 50-year average of 98. Concurrently, the NFIB's Uncertainty Index surged by 11 points to reach a historic high of 103.
NFIB Chief Economist Bill Dunkelberg commented, "Small business owners are grappling with greater uncertainty than ever before. Such uncertainty deters them from making investments in capital expenditures and inventory, particularly as ongoing inflation and rising financing costs continue to strain their financial margins."
Dunkelberg further noted that while holiday sales present a glimmer of hope, many Main Street businesses remain unsure about future market conditions and their potential improvement.
The survey also revealed that 51 percent of small business owners reported recent capital investments, a reduction of five points since August. Looking forward, 19 percent of owners plan to make capital expenditures in the coming six months, reflecting a similar five-point decrease from the previous month.
Additionally, there was a four-point decline in the number of owners reporting inventory gains, down to a net negative 13 percent, marking the lowest level since June 2020.
In September, 34 percent of small business owners, adjusted for seasonal variations, indicated they had job vacancies they were unable to fill, a decrease of six points from August and the lowest figure since January 2021. Furthermore, 59 percent were engaged in hiring or attempting to recruit new staff, though 90 percent reported a lack of qualified applicants for the open positions.
The survey also pointed out that the net percentage of owners anticipating an increase in real sales volumes improved by nine points to a net negative 9 percent.
Inflation emerged as the predominant challenge for 23 percent of business owners, a slight decrease of one point from August. The proportion of businesses raising their selling prices increased by two points to 22 percent, with a net 25 percent planning further price hikes in September.
While 32 percent of small business owners acknowledged raising employee compensation, this figure declined by one point compared to August, reaching its lowest level since April 2021. Looking forward, 23 percent of owners intend to increase compensation over the next three months, reflecting a three-point rise from the previous month.
