Small Business Optimism Index edges up

William Dunkelberg

A measure of optimism among small business owners has edged up, but concerns persist over inflation, labor shortages and other issues.

“Inflation and worker shortages continue to be the hardest challenges facing small business owners,” said Bill Dunkelberg, chief economist of the National Federation of Independent Business. “Even with these challenges, owners are still seeking opportunities to grow their businesses in the current period.”

The NFIB reported its Small Business Optimism Index rose three-tenths of a point to 92.1 between August and September.
The index has remained below its 48-year average of 98 for nine consecutive months.

The NFIB bases the index on the results of monthly surveys of members of the small business advocacy group, most of them small business owners. 

For September, the 10 components of the index were evenly split between increases and decreases.

The portion of NFIB members responding to the survey upon which the September index was based who expect the economy to improve over the next six months fell two points. At a net negative 44 percent, more anticipated worsening conditions.

A net 24 percent of respondents reported plans for capital outlays, down a point. A net 6 percent said they consider now a good time to expand, up a point.

The share of those who expect increased sales rose nine points. But at a net negative 10 percent, more said they anticipated decreased sales.

Expectations for profits rose two points, but only to a net negative 31 percent. Among those reporting lower profits, 42 percent blamed rising materials costs and 21 percent cited weaker sales.

A net 1 percent reported current inventories as too low, down two points. The share of those planning to increase inventories fell four points to a net 0 percent.

The proportion of respondents who said they plan to increase staffing rose two points to a net 23 percent. A net 46 percent reported unfilled job openings, down three points from August.

Asked to identify their single most important problem,
30 percent cited inflation. That’s up from 10 percent a year ago. Another 22 percent cited quality of labor and 10 percent the cost of labor.

A net 51 percent of respondents reported raising average selling prices, down two points from August. Price hikes were most frequent in the retail and construction sectors.

A net 45 percent reported raising compensation, down a point. A net 23 percent said they expect to raise compensation in the next three months, down three points.