U.S. NFIB Survey Shows Small Businesses Still Lacking Optimism

The NFIB Small Business Optimism Index edged down to 90.7 seasonally adjusted in October from 90.8 in September. The October number is yet again the lowest since May’s 89.4, and compares to a year-ago reading of 91.3. These data are the results of the monthly survey by the National Federation of Independent Businesses, based on the 1986 results equaling 100.

Among the survey’s data, the share of respondents reporting higher nominal sales in October was -17%, which followed -8% in September. The October number was the weakest since -28% in July 2020, that is, in the midst of the Covid “lockdowns.” The share expecting real sales to increase did improve slightly in October, expressed as a somewhat less negative move to -10% from -13% in September. Their expectations do remain pessimistic though, with the percentage looking for the economy to improve repeated September’s -43% in the October reading. The most pessimistic reading in the entire survey history was -61% in June 2022.

Survey participants reported that their two most significant problems are inflation and the quality of labor. These were both reported by 23% of participants in September, and in October, the quality of labor remained at 23%, while inflation moved very slightly to 22% as the most important problem.

Participants indeed indicate that they remain short of quality labor, although this is not quite as bad as it was a year ago. In October 43% reported that they were having trouble finding qualified people to fill open positions, the same as in September, but down from an all-time high of 51% in May 2022 and an average of 47% for all of last year.

The inflation situation, while still significant, has moderated somewhat since last year. In this survey, the highest response for inflation as the most significant problem was 37% in July 2022. In October 2023, that measure was 22%, following 23% in September. The portion of survey participants raising prices in October was 30%, up from 29% in September. But last year, the all-time high of 66% was reached in March, with an average for the entire year of 57%. The share of firms raising workers’ compensation was 36% in October, the same as the prior two months and actually down from a high of 50% in January 2022 and an average of 46% for all of 2022.

According to the Small Business Administration, there are 33 million small businesses in the United States, which employ 62 million workers. The NFIB surveys anywhere from 500 to 2000 respondents each month and the typical firm employs 10 people and reports gross sales of about $500,000 a year. The NFIB figures can be found in Haver’s SURVEYS database.