According to the latest survey conducted by the National Federation of Independent Business, optimism among American small businesses dipped slightly in August, falling 1.1 points to 98.7 but remaining above the 52-year average of 98.0. Meanwhile, the Uncertainty Index remained high at 89, even after falling 2 points from July.
“Uncertainty remains elevated among small business owners as they face a mixed set of challenges with weakened sales, supply chain disruptions, and inflation pressures,” NFIB Chief Economist Bill Dunkelberg said. “While expectations for the overall economy dimmed, Main Street owners remain largely positive in the health of their own businesses.”
Small business owners reported relatively consistent assessments of the overall health of their businesses in August, with 11 percent rating their businesses as excellent, down 3 points; 57 percent as good, up 2 points; 28 percent as fair, up 2 points; and 3 percent as poor, down 1 point.
However, the report reflects small business owners’ continued difficulties hiring qualified employees. A seasonally adjusted 35 percent of small business owners reported job openings they could not fill in August, down 1 point from July but 11 points above the historical average.
Rosemary Elebash, NFIB’s Alabama state director, said the national findings also reflect conditions facing small business owners in Alabama.
“Finding qualified workers is still the No. 1 challenge for many small business owners in Alabama and across the country,” Elebash said. “Owners need good employees so they can serve their communities and grow their businesses.”
According to the report, 56 percent of owners were hiring or trying to hire in August, and 82 percent of those owners reported few or no qualified applicants for the positions they were trying to fill. The share of owners who said they plan to create new jobs in the next three months fell to 17 percent, down 3 points from July’s highest level since October 2022.
But while labor concerns remained above their long-term averages, the share of owners identifying “labor quality or availability” and “labor costs” as their single most important problem eased in August, with labor costs falling to their lowest level since March 2021.
Meanwhile, concerns about inflation grew, with the share of owners identifying inflation as their single most important problem increasing 2 points in August. Inflation tied with taxes as the second-most commonly reported top small business problem, at 16 percent.
Those inflation concerns come as the war in Iran has contributed to higher fuel costs and broader price pressures. The conflict has also contributed to global supply chain disruptions, with 62 percent of small business owners reporting that supply chain disruptions affected their businesses to some extent in August.
Actual sales declined in August, with a seasonally adjusted net negative 9 percent of owners reporting higher nominal sales over the previous three months, down 5 points from July and the lowest reading since November.
Those challenges were also reflected in expectations for the months ahead. The share of owners expecting better business conditions fell 5 points in August. However, the seasonally adjusted net 10 percent expecting improvement remained above the historical average of 4 percent.
