NFIB Small Business Optimism Index Declines in August, Erasing July’s Gains

On Tuesday, the National Federation of Independent Business (NFIB), one of the largest small business associations in the US, released its Small Business Optimism Index (SBOI) for August. The SBOI decreased by 2.5 points to a reading of 91.2 in August, erasing July’s gains. This is the 32nd consecutive month the Index has been below the 50-year average of 98.

The Uncertainty Index rose to 92, its highest level since October 2020. Inflation remains the top issue among small business owners, with 24% reporting it as their top operating issue, down 1 point from July.

Other highlights of the SBOI include the following:

• The frequency of reports of positive profit trends was a net negative 37% (seasonally adjusted), 7 points worse than in July and the lowest since March 2010.
• The net percentage of owners expecting higher real sales volumes fell 9 points in August to a net negative 18% (seasonally adjusted). Real sales volume expectations were the largest contributor to the decline in the Index, along with earning trends and expected business conditions.
• A seasonally adjusted net 20% plan to raise compensation in the next three months, up 2 points from July.
• The net percentage of owners raising average selling prices fell 2 points from July to a net 20%, seasonally adjusted.

Commenting the on the report, NFIB Chief Economist Bill Dunkelberg said:

“The mood on Main Street worsened in August, despite last month’s gains. 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.”