NFIB Small Business Optimism Index Falls in October

On Tuesday, the National Federation of Independent Business (NFIB) reported that its Small Business Optimism Index (SBOI) fell 0.6 points to 98.2 in October. Despite the decline, the index remains above the 52-year average of 98.

The NFIB Uncertainty Index declined 12 points to 88, its lowest reading this year.

Other key highlights from the October SBOI include:

• Seasonally adjusted, 32% of owners reported job openings they could not fill, unchanged for the second straight month. The last time this share was 32% was in December 2020.
• Twenty-seven percent of owners cited labor quality as their single most important problem, up 9 points from September and the highest level since November 2021 (29%, a record high).
• A net negative 13% of owners reported higher nominal sales over the past three months, down 6 points from September.
• The frequency of reports of positive profit trends fell 9 points to a net negative 25%, the largest contributor to the overall decline in optimism.
• Both actual and planned price increases eased in October. A net 21% of owners raised average selling prices, down 3 points from September, while 30% planned future price increases, down 1 point.
• Sixty percent of owners reported supply chain disruptions, down 4 points from September.
• A net 20% of owners expected better business conditions over the next three months, down 3 points from September and the lowest level since April, although still above the historical average of 4%.

In remarks accompanying the report, NFIB Chief Economist Bill Dunkelberg said:

“Optimism among small businesses declined slightly in October as owners report lower sales and reduced profits. Additionally, many firms are still navigating a labor shortage and want to hire but are having difficulty doing so, with labor quality being the top issue for Main Street.”