NFIB celebrates 50 years of small business economic data with October survey

Says inflation and labor struggles continue to hinder small business economy

The National Federation of Independent Business (NFIB) is celebrating 50 years of the Small Business Economic Trends survey, but it said small business owners are not feeling optimistic in the current economic environment. The Optimism Index decreased 0.1 points in October to 90.7, marking the 22nd month below the 50-year average. The last time the Optimism Index was at or above the average was December 2021.

“When lawmakers return to Albany in two months, there must be a focus on helping New York's small businesses through unrelenting financial stresses," said NFIB State Director Ashley Ranslow. "Small businesses remain pessimistic about their future as inflation, energy costs and labor costs continue to hurt their bottom line. Main Street has pleaded with New York's policymakers to provide much-needed unemployment insurance tax and surcharge relief and to end the state's outdated COVID sick leave mandate. Albany has ignored those requests and has not done enough to help small businesses. Today's Small Business Economic Trends survey should serve as a warning to lawmakers to avoid any additional tax increases, labor mandates or costly regulations, and instead prioritize pro-small business policies."

The study’s key findings include:

√ Twenty-two percent of owners reported that inflation was their single most important problem in operating their business, down 1 point from last month.

√ Owners expecting better business conditions over the next six months was unchanged from September at a net negative 43% (seasonally adjusted).

√ A net negative 17% of all owners (seasonally adjusted) reported higher nominal sales in the past three months, down 9 points from September and the lowest reading since July 2020.

√ Forty-three percent (seasonally adjusted) of owners reported job openings that were hard to fill, unchanged from September, and remains historically very high.

√ Seasonally adjusted, a net 24% plan to raise compensation in the next three months, up 1 point from September.

√ The frequency of reports of positive profit trends was a net negative 32%, down 8 points from September.

√ The net percent of owners who expect real sales to be higher increased 3 points from September to a net negative 10%.

As reported in NFIB’s monthly jobs report, a seasonally adjusted net 17% of owners plan to create new jobs in the next three months. Overall, 61% of owners reported hiring or trying to hire in October. Of those hiring or trying to hire, 90% of owners reported few or no qualified applicants for the positions they were trying to fill.

Fifty-seven percent of owners reported capital outlays in the last six months, unchanged from September. Of those making expenditures, 37% reported spending on new equipment, 24% acquired vehicles, and 18% improved or expanded facilities. Twelve percent spent money on new fixtures and furniture, and 7% acquired new buildings or land for expansion. Twenty-four percent of owners plan capital outlays in the next few months.

A net negative 17% (seasonally adjusted) of all owners reported higher nominal sales in the past three months, down 9 points from September and the lowest reading since July 2020. The net percent of owners expecting higher real sales volumes improved 3 points to a net negative 10%.

The net percent of owners reporting inventory gains decreased 3 points to a net negative 6%. Not seasonally adjusted, 11% reported increases in stocks and 16% reported reductions. A net negative 3% of owners viewed current inventory stocks as “too low” in October, up 1 point from last month.

By industry, shortages are reported the most frequent in the transportation (16%), finance (12%) and retail (11%) sectors. Shortages in construction (6%) have been reduced because home sales have slowed dramatically due to higher interest rates. A net 0% of owners plan inventory investment in the coming months, up 1 point from September.

The net percent of owners raising average selling prices increased 1 point from September to a net 30% seasonally adjusted. Twenty-two percent of owners reported that inflation was their single most important problem in operating their business, down 1 point from last month.

Unadjusted, 11% of owners reported lower average selling prices and 39% reported higher average prices. Price hikes were the most frequent in finance (56% higher, 7% lower), retail (47% higher, 8% lower), construction (41% higher, 7% lower), transportation (41% higher, 18% lower), and wholesale (39% higher, 14% lower). Seasonally adjusted, a net 33% of owners plan price hikes.

Seasonally adjusted, a net 36% of owners reported raising compensation, unchanged from September. A seasonally adjusted net 24% of owners plan to raise compensation in the next three months, up 1 point from September. Nine percent cited labor costs as their top business problem and 23% said that labor quality was their top business problem.

The frequency of reports of positive profit trends was a net negative 32%, down 8 points from September. Among owners reporting lower profits, 32% blamed weaker sales, 21% blamed the rise in the cost of materials, 14% cited labor costs, 10% cited lower prices, 7% cited the usual seasonal change, and 4% cited higher taxes or regulatory costs. For owners reporting higher profits, 55% credited sales volumes, 20% cited usual seasonal change, and 7% cited higher selling prices.

Two percent of owners reported that all their borrowing needs were not satisfied. Twenty-three percent reported all credit needs met and 64% said they were not interested in a loan. A net 7% reported their last loan was harder to get than in previous attempts. Five percent of owners said that financing was their top business problem. A net 22% of owners reported paying a higher interest rate on their most recent loan.

The NFIB Research Center has collected Small Business Economic Trends data with quarterly surveys since the fourth quarter of 1973 and monthly surveys since 1986. Survey respondents are randomly drawn from NFIB’s membership. The report is released on the second Tuesday of each month. This survey was conducted in October 2023.

For 80 years, NFIB has been advocating on behalf of America’s small and independent business owners, both in Washington, D.C., and in all 50 state capitals. NFIB is nonprofit, nonpartisan, and member-driven. Since its founding in 1943, “NFIB has been exclusively dedicated to small and independent businesses, and remains so today.”

For more information, visit nfib.com.