NFIB Report Reveals Small Business Owners’ Pessimism Persists


The National Federation of Independent Business (NFIB) has disclosed that the sentiment among small business owners remains low, reflecting ongoing economic challenges. The Small Business Optimism Index, which decreased marginally by 0.1 points in November to 90.6, has been under the 50-year average of 98 for 23 consecutive months.

Inflation: A Persistent Concern for Business Owners

Inflation continues to be a major hurdle, with 22% of business owners identifying it as their primary challenge. This figure remains unchanged from October, although it represents a 10-point decrease from the previous year.

Labor Market and Sales: A Mixed Picture

While the economy showed strength in the third quarter, small businesses have not benefited significantly from it. Bill Dunkelberg, NFIB Chief Economist, noted the persistently high job openings on Main Street, with a lack of a strong wave of workers to fill these positions. Sales numbers present a concerning trend, with a net negative 17% of owners reporting higher nominal sales over the past three months, a statistic that has remained unchanged since October and is the lowest since July 2020.

Compensation and Price Adjustments

The data reveals a noteworthy intention among business owners to adjust compensation, with a net 30% planning to raise it in the next three months, marking the highest point since December 2021. Conversely, the net percentage of owners raising selling prices has declined by five points from October to a net 25%.

Employment and Capital Expenditure Trends

The report also highlights that 54% of owners attempted hiring in November, with 93% finding few or no qualified applicants. In terms of capital outlays, 61% reported making such expenditures in the last six months, with new equipment and vehicles being the top areas of spending.

Inventory and Industry-Specific Trends

Inventory changes are also noteworthy, with a net negative 3% of owners reporting gains. Shortages vary across industries, with retail, finance, and services sectors being the most affected.

Credit and Profit Trends

Only 2% of owners reported unmet borrowing needs, while 25% had all credit needs met. Profit trends remained largely negative, with a net negative 32% reporting positive profit trends, primarily due to weaker sales and rising costs.

Implications for Small Business Owners

The NFIB’s report paints a complex picture of the current small business landscape, characterized by cautious optimism about future business conditions but weighed down by inflation, labor shortages, and fluctuating sales. Small business owners must navigate these challenges by adapting their strategies, from managing costs to exploring new market opportunities and workforce solutions.

This comprehensive analysis serves as a crucial guide for small business owners, helping them understand the broader economic trends and their potential impact on their operations. The ongoing economic uncertainties underscore the importance of agility and resilience in the small business sector.

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Joshua Sophy Joshua Sophy is the Editor for Small Business Trends and has been a member of the team for 16 years. A professional journalist with 20 years of experience in traditional media and online media, he attended Waynesburg University and is a member of the Society of Professional Journalists. He has held roles of reporter, editor and publisher, having founded his own local newspaper, the Pottsville Free Press.