NFIB Celebrates 50 Years of Small Business Economic Data with October Survey
Inflation and labor struggles continue to hamper the small business economy
TRENTON, NJ (November 17, 2023) – The National Federation of Independent Business (NFIB) is celebrating 50 years of its Small Business Economic Trends survey, but small business owners are not feeling optimistic about the current economic climate. The Optimism Index fell 0.1 point to 90.7 in October, marking the 22nd month below the 50-year average. The last time the Optimism Index was at or above average was in December 2021.
“This month marks 50 years of NFIB’s small business economic survey,” said NFIB State Director Eileen Kean. “NFIB’s latest Small Business Economic Trends data shows us that small business owners are not optimistic about the current economic environment and are still dealing with inflation and labor struggles. New Jersey small business owners face an unpredictable environment and ever-changing economic winds as they continue to rebuild post-pandemic.
Key findings include:
• 22 percent of owners say inflation is their single most important problem in running their business, down one point from last month.
• Owners expecting better business conditions over the next six months were unchanged from September at a net minus 43% (seasonally adjusted).
• A net minus 17% (seasonally adjusted) of all owners reported higher nominal sales in the past three months, down nine points from September and the lowest since July 2020.
• 43 percent of owners (seasonally adjusted) reported hard-to-fill jobs, unchanged from September and historically very high.
• Seasonally adjusted, net 24% plan for compensation growth over the next three months, up one point from September.
• The frequency of reports on positive profit trends decreased by eight points compared to September and amounted to a net minus 32%.
• The net percentage of owners expecting higher real sales rose three points from September to a net minus 10%.
A seasonally adjusted net 17% of employers plan to create new jobs in the next three months, according to the NFIB’s monthly jobs report. Overall, 61% of owners reported hiring or trying to hire in October. 90% of recruiters or recruiters report that there are few or no qualified applicants for the positions they are trying to fill.
Fifty-seven percent of owners reported capital expenditures in the past six months unchanged from September. Of those who did spend, 37% said they spent on new equipment, 24% on purchased vehicles and 18% on improved or expanded facilities. 12 percent spent money on new fixtures and furniture, and 7 percent bought new buildings or land for expansion. 24 percent of owners plan capital expenditures in the next few months.
A net minus 17% (seasonally adjusted) of all owners reported higher nominal sales in the past three months, nine points from September and the lowest since July 2020. The net percentage of owners expecting higher real sales volume improved three points to a net minus 10%.
The net percentage of owners reporting an inventory gain fell three points to a net minus 6%. Not seasonally adjusted, 11% reported an increase in inventories and 16% reported a decrease. In October, a net minus 3% of owners rated current inventory holdings as “too low,” up one point from last month.
By industry, shortages are reported to be most prevalent in the transportation (16%), finance (12%) and retail (11%) sectors. Construction shortfalls (6%) eased as home sales fell sharply due to high interest rates. A net 0% of owners plan to invest in inventory in months one point above September.
The net percentage of owners who increased their average sales prices rose one point from September to a seasonally adjusted net 30%. Twenty-two percent of owners said inflation was their single most important problem in running their businesses, down one point from last month.
Unadjusted, 11% of owners reported lower average sales prices and 39% reported higher average prices. Price increases occurred most in finance (56% higher, 7% lower), retail (47% higher, 8% lower), construction (41% higher, 7% lower), transportation (41% higher, 18% lower). gave , and wholesale (39% higher, 14% lower). Seasonally adjusted, a net 33% of owners plan a price increase.
Seasonally adjusted, a net 36% of owners reported an increase in compensation, unchanged from September. A seasonally adjusted net 24% of owners plan to increase compensation in the next three months, up one point from September. Nine percent cited labor costs as their top business issue, and 23 percent said employee quality was their top business issue.
The frequency of reports on positive earnings trends decreased by eight points compared to September and amounted to a net minus 32%. Among owners reporting lower profits, 32% cited poor sales, 21% higher materials costs, 14% lower labor costs, 10% lower prices, 7% normal seasonal variation and 4% higher taxes or regulatory costs. For owners reporting higher profits, 55% cited higher sales volume, 20% cited normal seasonal variation, and 7% cited higher sales prices.
Two percent of owners reported not having all of their borrowing needs met. Twenty-three percent said all their credit needs were met, and 64 percent said they were not interested in a loan. A net 7% reported that their last loan was more difficult than previous attempts. Five percent of owners said financing was their top business challenge. A net 22% of owners reported paying higher interest rates on their most recent loan.
The NFIB Research Center has collected Small Business Economic Trends data with quarterly surveys since the fourth quarter of 1973 and monthly surveys since 1986. Survey respondents are randomly selected from the NFIB membership. The report is published on the second Tuesday of every month. This survey was conducted in October 2023.
For 80 years, NFIB has been advocating on behalf of America’s small and independent business owners, both in Washington and in all 50 state capitals. NFIB is a non-profit, non-partisan and member-driven organization. Since our founding in 1943, NFIB has been dedicated exclusively to small and independent businesses, and remains so today. For more information, visit nfib.com.
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