Cornhusker State News

The National Federation of Independent Business (NFIB) has announced a decline in its Small Business Optimism Index for August. The index fell by 2.5 points to 91.2, reversing gains made in July. This marks the 32nd consecutive month the index remains under the 50-year average of 98. The Uncertainty Index also increased, reaching 92, its highest level since October 2020.

According to the NFIB, inflation continues to be a significant concern for small business owners, with 24% identifying it as their primary operational issue. This is a slight decrease from July figures. NFIB Chief Economist Bill Dunkelberg noted, “The mood on Main Street worsened in August, despite last month’s gains,” adding that "historically high inflation remains the top issue for owners as sales expectations plummet and cost pressures increase."

Echoing these sentiments, NFIB State Director Ryan McIntosh commented on the implications for local economies, saying, “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.”

The report highlighted that the average frequency of reports showing positive profit trends declined, reaching its lowest point since March 2010. Furthermore, a net 18% of owners are no longer expecting higher real sales volumes. While 40% of business owners reported job openings they could not fill, a seasonal adjustment shows a slight increase in hiring compared to July.

Capital spending by small businesses has also seen a rise, with 56% of owners reporting expenditures over the past six months. Of these, 40% invested in new equipment, 21% purchased vehicles, and 18% made improvements to their facilities.

In terms of pricing and sales strategies, the percentage of owners planning to raise average selling prices decreased to 20% after seasonal adjustment. However, a net 25% indicated plans for price hikes. In the area of compensation, a net 20% of owners plan increases within the next three months, reflecting a modest rise.

Labor quality remains a significant challenge, coming in second after inflation as the top concern for business owners. The report also assessed borrowing, with 3% indicating unmet borrowing needs and 7% finding their last loan harder to obtain compared to earlier attempts.

The NFIB's Small Business Economic Trends study has been documenting these insights through surveys since 1973, providing critical data on the economic perspectives and challenges faced by small businesses across the United States. The current findings underscore ongoing difficulties, particularly in light of elevated inflation and uncertain economic conditions.