WASHINGTON — The National Federation of Independent Business (NFIB) Small Business Optimism Index fell half a point in September to 90.8. reported by the organization. September’s reading marked the 21st consecutive month below the 49-year average of 98. The survey found that 23% of owners reported inflation as their single most important concern in running their business, unchanged from August and tied to the quality of labor as the main concern.
“Owners remain pessimistic about future business conditions, which has contributed to their low optimism about the economy,” said Bill Dunkelberg, NFIB chief economist. “Sales growth among small businesses has slowed and the bottom line is shrinking, leaving owners with few options other than raising sales prices for financial relief.”
Key findings from the study include:
- Small business owners expecting better business conditions over the next six months worsened six points from August to a net negative 43% seasonally adjusted, but 18 percentage points better than last June’s reading of a net negative 61 % and set at recession levels.
- Forty-three percent (seasonally adjusted) of landlords reported hard-to-fill vacancies, up three points from August and remaining historically high, as landlords can’t hire enough workers due to few qualified applicants.
- A seasonally adjusted, net plan of 23% compensation increases over the next three months, down three points from August.
- The net percentage of owners raising average sales prices increased two points to a seasonally adjusted net 29% – still very much an inflationary level.
- According to the NFIB jobs report, 43% (seasonally adjusted) of all small business owners reported vacancies they could not fill during 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 over the next three months.
The survey reported that 57% of owners reported capital expenditures in the past six months. Of those making expenditures, 41% reported spending on new equipment, 22% purchased vehicles, and 17% improved or expanded facilities. Twelve percent of owners spent money on new equipment and furniture, and 7% acquired new buildings or land for expansion. Twenty-four percent of homeowners are planning capital expenditures in the next few months.
A net negative 8% of all owners (seasonally adjusted) reported higher nominal sales over the past three months, up six points from the lowest August reading since August 2020. The net percentage of owners expecting higher real sales volumes, improved by one point to a net negative level of 13%.
The net percentage of owners raising average sales prices increased two points from August to a seasonally adjusted net 29%. Twenty-three percent of owners reported inflation as their single most important concern in running their business, unchanged from last month and tied with labor quality as the top concern.
Seasonally adjusted, a net 36% reported compensation increases in September. A seasonally adjusted net plan of 23% for compensation increases over the next three months, down three points from August. Nine percent of owners cited labor costs as a top business issue, up one point from August. Twenty-three percent said labor quality was their top business concern, down one point.
The frequency of reporting positive earnings trends was a net negative 24%, up one point from August. Among owners reporting lower profits, 29% blamed weaker sales, 20% blamed higher material costs, 15% cited labor costs, 8% cited lower prices, 7% cited the usual seasonal change, and 6% cite higher taxes or regulatory costs. For owners reporting higher profits, 55% cited sales volumes, 22% cited the usual seasonal change, and 9% cited higher sales prices.
About the survey
The NFIB Research Center has collected data on small business economic trends with quarterly surveys since the fourth quarter of 1973 and monthly surveys since 1986. Survey respondents were randomly selected from NFIB members. The report is published every second Tuesday of the month. This survey was conducted in September 2023.