NFIB’s Small Business Optimism Index Increased in July but Remains Below 49-Year Average

The National Federation of Independent Business (NFIB), one of the largest small business associations in the US, reported on Tuesday (8-8-23) its Small Business Optimism Index (SBOI) for July. According to the report, the July SBOI increased 0.9 points to a reading of 91.9. This is the nineteenth consecutive month that the SBOI has been below the 49-year average of 98. The last time the Index was at or above the average was December 2021.

In July, hiring or trying to hire was a major concern among small business owners. Sixty-one percent of owners reported hiring difficulties, up two points from June. Of those hiring or trying to hire, 92% reported few or no qualitied applicants for the positions they were trying to fill. Thirty-three percent of owners reported few qualified applicants for their positions and 23% reported none.

Coming in a distant second was concern about inflation, with 21% of survey respondents saying inflation was the largest hurdle to operating their business.

Other highlights of the SBOI report include the following:

• Small business owners expecting better business conditions over the next six months improved 10 points from June to July but remain at a net negative 30%. This is 31 percentage points better than July 2022’s reading of a net negative 61%. It is also the highest reading since August 2021 but remains historically very negative.
• The net percentage of owners who expect real sales to be higher improved two points from June but still remains at a net negative 12%, a very pessimistic perspective.
• The net percentage of owners raising their average selling prices decreased four points to a net 25% (seasonally adjusted), still a very inflationary level but trending down. The measure is now at the lowest level since January 2021.

Adding additional background and his analysis to the report, NFIB Chief Economist Bill Dunkelberg said:

“With small business owners’ views about future sales growth and conditions dismal, owners want to hire and make money now from solid consumer spending. Inflation has eased slightly on Main Street, but difficulty in hiring remains a top business concern.”