Small Business Optimism Up, Inflation Remains

Optimism among small business owners inched up in August, according to the NFIB’s Small Business Optimism Index. A rise of 1.9 points reverses some of the declines in the first half of the year.

Almost a third (29%) of owners said inflation was their single most important problem in operating their business. “The small business economy is still recovering from the pandemic while inflation continues to be a serious problem for owners across the nation,” said NFIB Chief Economist Bill Dunkelberg. “Owners are managing the rising costs of utilities, fuel, labor, supplies, materials, rent, and inventory to protect their earnings.

The worker shortage is impacting small business productivity as owners raise compensation to attract better workers.” Other key findings from the report: Small business owners expecting better business conditions over the next six months improved 10 points from July to a net negative 42%, the highest level since February 2022, but a dismal outlook. The net percent of owners raising average selling prices decreased three points to a net 53% (seasonally adjusted), still a very inflationary outcome.

The net percent of owners who expect real sales to be higher increased 10 points from July to a net negative 19%, but owners still want to hire. The Uncertainty Index increased seven points to 74.