The NFIB’s Small Business Optimism Index Rose Modestly in July

The National Federation of Independent Business (NFIB), one of the largest small business associations in the US, reported today (8-9-22) their NFIB Small Business Optimism Index (SBOI) for July 2022. According to the report, the July SBOI increased 0.4 points to a reading of 89.9; however, it is the sixth consecutive month that the SBOI has been below the 48-year average reading of 98.

Owners surveyed in July expecting better business conditions over the next six months increased nine points from June’s record low level to a net negative 52%. Expectations for better business conditions have deteriorated every month from January to June of 2022.

Thirty-seven percent of owners reported inflation was their single most important problem in operating their business, an increase of three points from June and the highest level since Q4 of 1979. The net percent of owners raising average selling prices decreased seven points to a net 56% (seasonally adjusted). The decline is significant but the net percent still raising prices is inflationary.

Other highlights of the July SBOI report include the following:

1. Forty-nine percent of owners reported job openings that could not be filled, down one point from June but it still remains historically high.
2. Thirty-two percent of owners reported that supply chain disruptions have had a significant impact on their business. Another 36% report a moderate impact and 23% report a mild impact. Only 9% report no impact from recent supply chain disruptions.
3. Seasonally adjusted, a net 48 percent reported raising compensation, unchanged from June. A net 25 percent plan to raise compensation in the next three months, down 3 points from June.
4. The net percent of owners expecting higher real sales volumes decreased 1 point to a net negative 29 percent.

In a statement prepared for the release of the July SBOI, NFIB Chief Economist Bill Dunkelberg said:

“The uncertainty in the small business sector is climbing again as owners continue to manage historic inflation, labor shortages and supply chain disruptions. As we move into the second half of 2022, owners will continue to manage their businesses into a very uncertain future.”