Small Business Optimism Declined 2.5 Points in August

Washington, DC, September 10, 2024-The NFIB Small Business Optimism Index fell by 2.5 points in August to 91.2, erasing all of July’s gain. This is the 32nd consecutive month 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% of owners reporting it as their top small business operating issue, down one point from July.

“The mood on Main Street worsened in August, despite last month’s gains,” said NFIB chief economist Bill Dunkelberg. “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.”

Key findings include:

• The frequency of reports of positive profit trends was a net negative 37% (seasonally adjusted), seven points worse than in July and the lowest since March 2010.
• Twenty-four percent of owners reported inflation as their single most important problem in operating their business, down one point from July.
• The net percent of owners expecting higher real sales volumes fell nine points in August to a net negative 18% (seasonally adjusted). Real sales volume expectations were the largest contributor to the decline in the Optimism Index along with earning trends and expected business conditions.
• A seasonally adjusted net 20% plan to raise compensation in the next three months, up two points from July.
• The net percent of owners raising average selling prices fell two points from July to a net 20% seasonally adjusted.