NFIB's Small Business Economic Trends Survey Celebrates 50 Years, Jobs Report Shows Continuing Tight Labor Market

Date: November 15, 2023

Labor quality and inflation remain top concerns as small businesses continue seeing unfilled jobs at 43%.

The Small Business Economic Trends survey is celebrating its 50th anniversary, but small business owners are not feeling optimistic about current business conditions. In the October report, the NFIB Small Business Optimism Index decreased 0.1 points to 90.7. This is the 22nd consecutive month below the 50-year average of 98. The last time the Index was at or above the average was December 2021.  

“This month marks the 50th anniversary of NFIB’s small business economic survey,” said NFIB Chief Economist Bill Dunkelberg. “The October data shows that small businesses are still recovering, and owners are not optimistic about better business conditions. Small business owners are not growing their inventories as labor and energy costs are not falling, making it a gloomy outlook for the remainder of the year.” Dunkelberg and Holly Wade, NFIB Research Center Executive Director, joined the Small Business Rundown to discuss the history and compare the Small Business Economic Trends survey over the years.  

Key findings of the report include: 

  • Twenty-two percent of owners reported inflation as their single most important problem, down one point from last month. 
  • Owners expecting better business conditions over the next six months remained unchanged from September at a net negative 43% (seasonally adjusted). 
  • A net negative 17% of all owners (seasonally adjusted) reported higher nominal sales in the past three months, down nine points from September and the lowest reading since July 2020. 
  • Forty-three percent (seasonally adjusted) of owners reported job openings that were hard to fill, unchanged from September. 
  • Seasonally adjusted, a net 24% plan to raise compensation in the next three months, up one point from September. 
  • The frequency of reports of positive profit trends was a net negative 32%, down eight points from September.  
  • The net percentage of owners who expect real sales to be higher increased three points from September to a net negative 10%. 
  • NFIB’s monthly jobs report found that a seasonally adjusted net 17% of owners plan to create new jobs in the next three months. In total, 61% of owners reported hiring or trying to hire in October, and of those, 90% reported few or no qualified applicants for vacant positions. Thirty-seven percent of owners have openings for skilled workers and 18% have openings for unskilled labor.  

“Prior the first SBET publication in Q3 1973, virtually all data about America’s economy focused on big businesses,” said Holly Wade, NFIB Research Center Executive Director. “Yet small businesses were – and are – as important, if not more. They create two out of every three net new jobs. They account for half of U.S. GDP. They are the world’s third-largest economy, if they were their own country. And on top of that, all big businesses start, you guessed it, small!”

Fifty-seven percent of owners reported capital outlays in the last six months, unchanged from September. Of those making expenditures, 37% reported spending on new equipment, 24% acquired vehicles, and 18% improved or expanded facilities. Twelve percent spent money on new fixtures and furniture and 7% acquired new buildings or land for expansion. Twenty-four percent of owners plan capital outlays in the next few months.  

The net percent of owners raising average selling prices increased one point from September to a net 30% seasonally adjusted. Unadjusted, 11% of owners reported lower average selling prices, and 39% reported higher average prices. The price increases were the most frequent in finance (56% higher, 7% lower), retail (47% higher, 8% lower), construction (41% higher, 7% lower), transportation (41% higher, 18% lower), and wholesale (39% higher, 14% lower). Seasonally adjusted, a net 33% of owners plan price hikes.  

Seasonally adjusted, a net 36% of owners reported raising compensation, unchanged from September. A seasonally adjusted net 24% of owners plan to raise compensation in the next three months, up one point from September. Nine percent cited labor costs as their top business problem and 23% said that labor quality was their top business problem. 

A net negative 32% reported positive profit trends, down eight points from September. Among owners reporting lower profits, 32% blamed weaker sales, 21% blamed the rise in the cost of materials, 14% cited labor costs, 10% cited lower prices, 7% cited the usual seasonal change, and 4% cited higher taxes or regulatory costs. For owners reporting higher profits, 55% credited sales volumes, 20% cited usual seasonal change, and 7% cited higher selling prices. 

Examining loans and credit, 2% of owners reported their borrowing needs were not satisfied. Another 23% shared that their credit needs were met, and 64% said they were not interested in a loan. A net 7% reported their last loan was harder to get than in previous attempts. A net 22% of owners reported paying a higher interest rate 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 drawn from NFIB’s membership. The report is released on the second Tuesday of each month. This survey was conducted in September 2023. 

The full Small Business Economic Trends report along with the NFIB Jobs Report are available for further analysis. Get insights about the Small Business Economic Trends survey from experts on the Small Business Rundown now.

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