Small Business Optimism Slips in September

The National Federation of Independent Business (NFIB) Small Business Optimism Index decreased one point in September to 99.1. Three of the 10 Index components improved, five declined, and two were unchanged.

“Small business owners are doing their best to meet the needs of customers, but are unable to hire workers or receive the needed supplies and inventories,” said NFIB chief economist Bill Dunkelberg. “The outlook for economic policy is not encouraging to owners, as lawmakers shift to talks about tax increases and additional regulations.”

Key findings include:

  • The NFIB Uncertainty Index increased five points to 74.
  • Owners expecting better business conditions over the next six months decreased five points to a net negative 33 percent.
  • Fifty-one percent of owners reported job openings that could not be filled, a 48-year record high for the third consecutive month.
  • A net 42 percent of owners reported raising compensation, a 48-year record high.

As reported in NFIB’s monthly jobs report, a record 51 percent of small business owners (seasonally adjusted) reported job openings they could not fill in the current period, up one point from August. A net 42 percent of owners (seasonally adjusted) reported raising compensation, up one point from August and a 48-year record high reading.

A net 30 percent of owners plan to raise compensation in the next three months, up four points from August’s record high reading. Twelve percent of owners cited labor costs as their top business problem and 28 percent said that labor quality was their top business problem – both record high readings.

Fifty-three percent of owners reported capital outlays in the next six months, down two points from August and historically a weak reading. Of those making expenditures, 37 percent reported spending on new equipment, 21 percent acquired vehicles, and 12 percent improved or expanded facilities. Six percent of owners acquired new buildings or land for expansion and 10 percent of owners spent money for new fixtures and furniture. Twenty-eight percent plan capital outlays in the next few months, down two points from August and one point below the 48-year average.

Over 35 percent of owners report supply chain disruptions have had a significant impact on their business. Another 32 percent report a moderate impact and 21 percent report a mild impact. Only 10 percent of owners report no impact from recent supply chain disruptions.

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