Cornhusker State News

The NFIB Small Business Optimism Index decreased by 2.5 points in August, reaching 91.2 and undoing the gains made in July. This marks the 32nd month that the index has remained below its 50-year average of 98. The Uncertainty Index rose to 92, its highest since October 2020. Inflation continues to be the primary concern for small business owners, with 24% identifying it as their top operating issue, a slight decrease from July.

"The mood on Main Street worsened in August, despite last month’s gains," said NFIB Chief Economist Bill Dunkelberg. "Historically high inflation remains the top issue for owners as sales expectations plummet and cost pressures increase. Uncertainty among small business owners continues to rise as expectations for future business conditions worsen."

NFIB State Director Ryan McIntosh expressed concern over the impact on Nebraska's economy: "The latest decline in the Small Business Optimism Index raises significant concerns for our local and state economies. Nebraska’s small businesses are dealing with the dual challenges of rising inflation and costs, which impacts their ability to invest and plan for the future. It’s crucial that we advocate for supportive policies that empower our businesses and help them succeed for years to come."

Key findings from the report include a net negative profit trend of 37%, worsening by seven points since July, marking the lowest level since March 2010. Additionally, 24% of owners identified inflation as their most pressing problem, a slight decrease from July.

Sales expectations have dropped significantly; a net negative 18% of owners expect higher real sales volumes, contributing heavily to the drop in optimism alongside earnings trends and anticipated business conditions.

Regarding compensation plans, a seasonally adjusted net of 20% plan to raise compensation within three months, an increase from July figures.

The report also highlighted ongoing hiring challenges; a seasonally adjusted 40% reported unfilled job openings in August. Of those seeking employees, 90% noted difficulty finding qualified applicants.

Investment activity showed some positive signs with capital outlays reported by 56% of owners over six months—a slight increase from July—with spending primarily on new equipment and vehicles.

On sales trends, a net negative 16% reported higher nominal sales over three months. Inventory reports remained unchanged at a net negative of 9%.

In terms of pricing strategies, there was a two-point decrease in those raising average selling prices compared to July figures.

Sectors such as finance, retail, construction, and manufacturing experienced notable price increases. Despite this, labor quality remains a prominent issue behind inflation.

Profit trends were affected by weaker sales (31%), increased material costs (17%), labor expenses (13%), and reduced selling prices (10%).

Credit access remained relatively stable with only four percent citing financing as their top problem in August.

The NFIB Research Center has been gathering data on Small Business Economic Trends through quarterly surveys since late-1973 and monthly surveys since mid-1986 using randomly selected respondents from NFIB's membership base. The survey referenced here was conducted during August 2024.