Economic conditions continue to cause strain on the market as most business owners continue to cite inflation and labor shortages as their primary struggles.
Small Business optimism has decreased again in August, according to the National Federation of Independent Business (NFIB).
The decrease of 0.6 took the Small Business Optimism Index down to 91.3, marking the 20th consecutive month that the index has been below the 49-year average of 98.
In August, 23% of business owners reported that inflation was the single most important business issue, up two points from the prior month. The net percent of owners who are raising average selling prices has also increased two points to a net 27% (adjusted for the season), a factor that is still considered an inflationary level.
“Small business owners are a stubborn bunch. They’re determined to get through this, but its not easy. Inflation means they’re paying more for everything, and a labor shortage means they’re paying higher wages. When you put those things together, it can’t help but impact their customers,” said NFIB State Director Dawn McVea.
While individual state data is not available, NFIB’s findings in the August report would indicate that more small businesses are losing faith in seeing better conditions over the next six months. That index went down seven points from July to a net negative 3.7%. However, that level is still 24% points better than June of 2022’s reading of a net negative 6.1%.
Labor shortages continue to be a major difficulty for business as well, with 40% of owners reporting job openings that are hard to fill. This metric remains historically high.
The net percent of business owners who anticipate real sales to be higher has decreased two points to a net negative 14%.
Positive profit trends were a net negative 25% for August, which was up five points from July. Those who reported lower profits, most blamed weaker sales, the rise in cost of materials, and labor costs.