The Small Business Optimism Index declined 2.0 points in September, the first decline in three months, according to the National Federation of Independent Business.
Although the 98.8 optimism reading is still slightly above the survey’s 52-year average of 98, it has also fallen from a historic high of 102.8 at the beginning of the year.
“While most owners evaluate their own business as currently healthy, they are having to manage rising inflationary pressures, slower sales expectations, and ongoing labor market challenges,” NFIB Chief Economist Bill Dunkelberg said.
A decline in those expecting better business conditions in the next six months and an increase in reports of excess inventory contributed most to the drop in the Optimism Index. While there was a 2-point decline in the Optimism Index in September, the Uncertainty Index rose 7 points to 100, which is the fourth-highest reading in over 51 years.
“Although uncertainty is high, small business owners remain resilient as they seek to better understand how policy changes will impact their operations,” Dunkelberg said.
Key findings include:
- Supply chain and inflation issues stood out as a key problem in the report. The percentage of owners raising average selling prices rose 3 points from August to a net 24% (seasonally adjusted). A net 31% (seasonally adjusted) plan to increase prices over the next three months, up 5 points from August.
- 14% of owners reported that inflation was their single most important problem in operating their business (higher input costs), up 3 points from August.
- 64% of small business owners reported that supply chain disruptions were affecting their business, an increase of 10 points from August.
- A net negative 7% (seasonally adjusted) of owners viewed current inventory stocks as “too low” in September, down 7 points from August. This was the largest monthly decline in the survey’s history.
One bright spot was actual earnings changes (the net percentage of owners reporting higher vs. lower profits), which increased three points in September. This is the highest level since December 2021.
However, the percentage of owners expecting better business conditions fell 11 points from August to a net 23% (seasonally adjusted).
In September, 18% of small business owners cited labor quality as their single most important problem, down 3 points from August and tying with taxes as the top single most important problem.
NFIB’s September report showed 32% (seasonally adjusted) of all small business owners reported job openings they could not fill in September, unchanged from August. The last time unfiled job openings fell below 32% was in July 2020.
Of the 58% of owners hiring or trying to hire in September, 88% reported few or no qualified applicants for the positions they were trying to fill. A seasonally adjusted net 16% of owners plan to create new jobs in the next three months, up 1 point from August and the fourth consecutive monthly increase. Hiring plans are at their highest level since January.
To read the entire NFIB Small Business Economic Trends report for September, go here.
