NFIB Releases New Small Business Economic Trends Survey
September saw an interesting trend for small business. On the one hand, optimism rose. On the other hand, uncertainty rose too.
These findings come from NFIB’s Small Business Economic Trends (SBET) survey, which includes the Optimism Index and the Uncertainty Index. Last month, the Optimism Index rose 3.8 points to 104.0 – a historically high reading in the decades-long history of the SBET. Meanwhile, the Uncertainty Index rose by 2 points to 92. By comparison, the Uncertainty Index stood at 75 in April of this year at the height of pandemic-related closures and restrictions.
Beneath these findings are other important data points showing changes in the small business economy and business operations. On the optimism front, NFIB’s survey of small business owners found:
- Owners expecting better business conditions over the next 6 months improved 8 points to a net 32%.
- Real sales expectations in the next 3 months increased 5 points to a net 8%.
- Inventory investment plans over the next 3 to 6 months increased by 5 points to a net 11%.
- The percent of owners thinking it’s a good time to expand increased 1 point to 13%.
- Earnings trends over the past 3 months improved 13 points to a net negative 12% reporting higher earnings.
NFIB’s latest survey found further evidence of a rebounding small business sector. For example:
- Jobs. A net 23% of owners plan to create new jobs in the next 3 months, up 2 points from the August report and 22 points above April’s report. However, 36% of all owners reported job openings that they could not fill in the current period.
- Spending. Fifty-three percent of owners reported capital outlays in the last 6 months, up 6 points from August. Of those making expenditures, 38% reported spending on new equipment, 23% acquired vehicles, and 16% improved or expanded facilities. Four percent acquired new building or land for expansion and 8% spent money for new fixtures and furniture.
- Sales. A net negative 6% of all owners reported higher nominal sales in the past three months, an improvement of 9 points from August but still below pre-crisis levels. The net percent of owners expecting higher real sales volumes increased 5 points to a net 8% of owners.
- Wages. A net 23% reported raising compensation, up 5 points from August. A net 16% of owners are planning to do so in the next three months.
While these developments are positive, the rise in uncertainty shows continued concern over the long-term effects of the COVID-19 pandemic, the resulting government shutdowns, and ongoing restrictions on business operations.
Rising uncertainty likely also reflects growing concern over congressional inaction on further pandemic recovery legislation. NFIB has found that nearly 9-in-10 small businesses have exhausted federal financial assistance and nearly 50% anticipate needing more in the next year.
Without further support, many small businesses will face tough decisions. The options include laying off employees – something at least 22% expect to do within the next 6 months – or even closing permanently.