Small business optimism remains below average as inflation concerns limit positive sentiments among owners, according to the National Federation of Independent Business.
The NFIB Small Business Optimism Index increased 0.3 points in September to 91.5, its 33rd straight month of being below the 50-year average of 98. Twenty-three percent of owners cited inflation as their most important problem in operating their business, down one point from August and still the No. 1 issue. Seventeen percent cited labor quality as their top business problem. The index for uncertainty increased 11 points to a record 103.
“Uncertainty is at a historically high level,” according to the NFIB. “The election will trigger adjustments to plans once the results are known. The services sector is still holding up, while manufacturing and housing remains weak. In a few weeks, the picture will become much more certain for Main Street firms.”
Fifty-one percent of owners reported capital outlays in the last six months, down five points from the previous month. The number of owners seeing inventory gains dropped four points to a net negative 13 percent, its lowest reading since June 2020.
The frequency of positive profit trend reports increased three points to a net negative 34 percent. Among those seeing lower profits, 37 percent cited weaker sales while smaller percentages cited cost of materials, labor costs and lower selling prices.
The average rate paid on short maturity loans increased a half point to 10.1 percent, its highest reading since 2001. Only 12 percent of owners paid a higher rate on their most recent loan, down three points from August and its lowest reading in more than 2 1/2 years.
Thirty-four percent of owners had jobs they could not fill in the current period, down six points from August and its lowest reading since 2021. The vast majority of owners either hiring or trying to hire last month had few or no qualified applicants. Thirty-two percent raised compensation, down one point from August and its lowest reading in nearly 2 1/2 years.