Construction optimism increases while Services optimism falls since April
On August 26, the NFIB Research Center released a quarterly Small Business Economic Trends industry report that focuses on the current state of business operations in four key industries: Construction, Manufacturing, Retail, and Services.
The Optimism Index score was at 99.7, but with significant differences between industries. “Small businesses are working hard to recover from the pandemic while still facing strong headwinds,” said Holly Wade, Executive Director of NFIB’s Research Center. “Each industry is recovering differently but all have been impacted by the lack of qualified workers and for many, supply chain disruptions.”
In the Construction Industry, the optimism index increased 1.4 points to 98.8 (the lowest score of the four industries). However, these small businesses have been hit particularly hard by the ongoing hiring crisis: over three-fifths of all industry small businesses (61%) said that they had unfilled job openings.
These unfilled positions have slowed the growth and recovery of these firms, even during a period of very high demand for construction contracts thanks to historically low interest rates.
Earnings continued to fall in construction, with a net negative 22% reporting increased earnings – meaning that the number of owners whose earnings fell was 22 points higher than the number of owners whose earnings increased.
The Manufacturing Industry continues to show the highest level of optimism of the featured industries, with an Optimism Index of 105.2, a 0.4-point increase from April. They are also more optimistic about future sales, with a net 9% reporting that they expect higher sales in the next few months compared to the overall reading of net negative 4%.
Like Construction, Manufacturing was hit particularly hard by the labor shortage with 60% of all firms reporting unfilled job positions. A net 41% of firms say they plan to hire despite the shortage, 14 points above the overall reading.
In the Retail Industry, the July Optimism Index was 100.4, a full two points down from the previous report – the largest decrease of the four industries highlighted in the report. Earning trends fell from a net 2% to a net negative 9%, while expectations for economic conditions fell to a net negative 22%.
Inventory was a major concern in Retail, with a net 20% reporting that their current inventory levels are “too low.” A net 13% intend to increase their inventories soon, seven points higher than the reading for the overall population.
Lastly, the Services Industry saw a modest increase of 0.4 points to their Optimism Index, for a total of 100.2. This industry was marked by increased rates of economic anxiety, with the percent of owners expecting better sales falling 11 points since April to a net negative 1%.
Similarly, a net negative 19% in Services expect better business conditions six months from now, a decline of 11 points.
You can read the full industry-specific SBET report here. Small businesses continue to work to recover and thrive despite the challenges of the COVID-19 pandemic – and NFIB wants to hear your business’ story here.