Small business optimism remains historically low in September
WASHINGTON, DC (Oct. 8, 2024) – The NFIB Small Business Optimism Index increased by 0.3 points in September to 91.5. This is the 33rdrd month in a row below the 50-year average of 98. The uncertainty index rose 11 points to 103, the highest reading on record. Fifty-one percent of owners reported capital expenditures in the past six months, up five points from August. Meanwhile, the number of owners reporting inventory gains fell four points to a net negative 13% (seasonally adjusted), the lowest reading since June 2020.
“Small business owners are more uncertain than ever,” said Bill Dunkelberg, NFIB Chief Economist. “Uncertainty makes owners hesitant to invest in capex and inventory, especially as inflation and capital costs continue to put pressure on their bottom line.” Although there is some hope ahead of the holiday sales season, many Main Street owners are left wondering if future business conditions will improve.
The main results include:
- The net percentage of owners reporting inventory gains fell four points to a net negative 13% (seasonally adjusted), the lowest since June 2020.
- The average interest rate on paid loans with a short maturity was 10.1% and increased by 0.6 points from August. The last time it was this high was February 2001.
- Thirty-four percent (seasonally adjusted) of all owners reported jobs they could not fill in the current season, down six points from August and the lowest reading since January 2021.
- A net 12% of owner occupiers reported paying higher interest rates on their latest loan, down three points from August and the lowest rate since March 2022.
- Fifty-one percent reported capital expenditures in the past six months, up five points from August. The last time it was this low was July 2022.
- Seasonally adjusted, a net 32% reported an increase in benefits, down one point from August and remaining the lowest reading since April 2021.
- Twenty-three percent of owners reported that inflation was their most important problem in running their businesses (higher input and labor costs), down one point from August but remaining the top issue.
As reported in the NFIB’s monthly jobs report, a seasonally adjusted 34% of all small business owners reported jobs they could not fill in the current season, down six points from August and the lowest rate since January 2021. Of the 59% of owners hiring or trying to hiring in September, 90% reported few or no qualified candidates for the positions they were trying to fill.
Fifty-one percent of owners reported capital expenditures in the past six months, up five points from August. Of those spending, 35% reported spending on new equipment, 23% bought a vehicle, and 15% improved or expanded facilities. Ten percent spent money on new furnishings and furniture, and 4% acquired new buildings or land for expansion. Nineteen percent (seasonally adjusted) estimate capital spending in the next six months, a five-point drop from August.
A net negative 17% of all owners (seasonally adjusted) reported higher nominal sales in the past three months, up one point from August and this year’s lowest reading. The net percent of owners expecting higher actual sales volume increased nine points to a net negative 9% (seasonally adjusted).
The net percentage of owners reporting inventory gains fell four points to a net negative 13%, seasonally adjusted, the lowest since June 2020. Not seasonally adjusted, 10% reported increases in inventory and 22% reported decreases.
A net negative 4% (seasonally adjusted) of owners rated current inventory levels as “too low” in September, up one point from August. A net negative 3% (seasonally adjusted) of owners plan to invest in inventory in the coming months, which is down two points from August.
The net percentage of owners increasing the average sales price increased by two points from August to a net 22% seasonally adjusted. Twenty-three percent of owners said inflation was the single most important issue in running their businesses, down one point from August and remaining the top issue. Unadjusted, 13% said a lower average sales price and 34% said a higher average price.
Price increases were most common in the financial (64% higher, 4% lower), retail (48% higher, 9% lower), transportation (41% higher, 18% lower) and construction (38% higher, 12% lower) sectors. Seasonally adjusted, net 25% forecast for price increases in September.
Seasonally adjusted, 32% net reported benefit increases, down one point from August and the lowest since April 2021. A seasonally adjusted net 23% plan to increase benefits 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 just four points below the high of 13% reached in December 2021. Seventeen percent said labor quality was the top business issue, still behind inflation as the number. one case.
The frequency of announcements of positive earnings trends was a net negative of 34% (seasonally adjusted), which is about three points from August. Among owners who reported lower profits, 37% blamed lower sales, 14% cited higher material costs, 13% cited labor costs, and 11% cited lower sales prices. For owners reporting higher profits, 47% cited sales volume, 26% cited normal seasonal changes, and 9% cited higher sales prices.
Two percent of owners said that all of their credit needs were not met. Twenty-four percent said that all credit needs were met, and 62% said they were not interested in a loan. A net 8% said it was more difficult to get their last loan than in previous attempts.
Four percent of owners said financing was their top business problem in September, unchanged from August.
The NFIB Research Center has collected data on small business economic development through quarterly surveys since the fourth quarter of 1973 and monthly surveys since 1986. Survey respondents are drawn randomly from the NFIB membership. The report is published on the second Tuesday of each month. This survey was conducted in September 2024.
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