The National Federation of Independent Business (NFIB) Small Business Optimism Index rose by 0.3 points in September to 91.5. This is the 33rd consecutive month below the 50-year average of 98. The Uncertainty Index rose 11 points to 103, the highest reading recorded.
Just over half (51 percent) of small-business owners reported capital outlays in the last six months, down five points from August. Meanwhile, the number of owners reporting inventory gains fell four points to a net negative 13 percent (seasonally adjusted), the lowest reading since June 2020.
“Small-business owners are feeling more uncertain than ever,” NFIB Chief Economist Bill Dunkelberg said in a release. “Uncertainty makes owners hesitant to invest in capital spending and inventory, especially as inflation and financing costs continue to put pressure on their bottom lines. Although some hope lies ahead in the holiday sales season, many Main Street owners are left questioning whether future business conditions will improve.”
As reported in NFIB’s monthly jobs report, a seasonally adjusted 34 percent of all small-business owners reported job openings they could not fill in their current period, down six points from August and the lowest reading since January 2021. Of the 59 percent of owners hiring or trying to hire in September, 90 percent reported few or no qualified applicants.
Fifty-one percent of owners reported capital outlays in the last six months, down five points from August. Of those small-business owners making expenditures, 35 percent reported spending on new equipment, 23 percent acquired vehicles, and 15 percent improved or expanded facilities. Ten percent spent money on new fixtures and furniture and 4 percent acquired new buildings or land for expansion. Nineteen percent (seasonally adjusted) plan capital outlays in the next six months, down five points from August.
A net negative 17 percent of all owners (seasonally adjusted) reported higher nominal sales in the past three months, down one point from August and the lowest reading of this year. The net percentage of owners expecting higher real sales volumes rose nine points to a net negative 9 percent (seasonally adjusted).
The net percentage of owners reporting inventory gains fell four points to a net negative 13 percent, seasonally adjusted, the lowest reading since June 2020. Not seasonally adjusted, 10 percent reported increases in stocks and 22 percent reported reductions.
A net negative 4 percent (seasonally adjusted) of owners viewed current inventory stocks as “too low” in September, up one point from August. A net negative 3 percent (seasonally adjusted) of owners plan inventory investment in the coming months, down two points from August.
The net percentage of owners raising average selling prices rose two points from August to a net 22 percent seasonally adjusted. Twenty-three percent of owners reported that inflation was their single most important problem in operating their business, down one point from August and remaining the top issue. Unadjusted, 13 percent reported lower average selling prices and 34 percent reported higher average prices.
Price hikes were the most frequent in the finance (64 percent higher, 4 percent lower), retail (48 percent higher, 9 percent lower), transportation (41 percent higher, 18 percent lower), and construction (38 percent higher, 12 percent lower) sectors. Seasonally adjusted, a net 25 percent planned price hikes in September.
Seasonally adjusted, a net 32 percent reported raising compensation, down one point from August and remaining and the lowest reading since April 2021. A seasonally adjusted net 23 percent planned to raise compensation in the next three months, up three points from August. Nine percent of owners cited labor costs as their top business problem, unchanged from August and only four points below the highest reading of 13 percent reached in December 2021. Seventeen percent said that labor quality was their top business problem, remaining behind inflation as the number one issue.
The frequency of reports of positive profit trends was a net negative 34 percent (seasonally adjusted), up three points from August. Among owners reporting lower profits, 37 percent blamed weaker sales, 14 percent blamed the rise in the cost of materials, 13 percent cited labor costs, and 11 percent cited lower selling prices. For owners reporting higher profits, 47 percent credited sales volumes, 26 percent cited usual seasonal change, and 9 percent cited higher selling prices.
Two percent of owners reported that all their borrowing needs were not satisfied. Twenty-four percent reported all credit needs met and 62 percent said they were not interested in a loan. A net 8 percent reported their last loan was harder to get than in previous attempts.
Four percent of owners reported that financing was their top business problem in September, unchanged from August.