According to the NFIB Small Business Optimism Index, small business owners’ optimism has improved to nearly three points above the 52-year average, but labor issues remain a key concern.
The survey of NFIB members conducted in August found that optimism is up 0.5 points to 100.8, above the more than half century average of 58. The biggest increase came from those expecting real sales to be higher. The Uncertainty Index fell by 4 points to 93, but remained well above the historical average, and stemmed from a decrease in small business owners’ uncertainty over financing expectations and planned capital expenditures.
“Optimism increased slightly in August with more owners reporting stronger sales expectations and improved earnings,” said NFIB Chief Economist Bill Dunkelberg. “While owners have cited an improvement in overall business health, labor quality remained the top issue on Main Street.”
The survey found that nearly 70 percent of respondents rated the health of their business as either excellent or good. Twenty-seven reported their business’s health as fair (down 4 points) and 4 percent said it was poor (which was unchanged). Labor quality was the biggest issue facing small businesses, with 21 percent reporting that it was their top problem, and 32 percent of respondents reported job openings they could not fill, down 1 point from July. The last time unfilled job openings fell below 32 percent was in July 2020, NFIB said. Twenty-eight percent had openings for skilled workers, and 13 percent had openings for unskilled workers.
Finding labor to fill those open positions was most acute in the construction, manufacturing and transportation industries, the survey found. Nearly half (48 percent) of the small businesses in the construction industry had job openings they could not fill, down six points from July, and down 11 points from last year’s level. The response suggests a softening in the job market, NFIB officials said.
Additionally, a net 15 percent of owners plan to create new jobs in the next three months, up 1 percentage point from July and the third consecutive monthly increase. NFIB termed the trend positive but historically low. Of those trying to hire in August, 81 percent reported few or no qualified applicants for the positions they were trying to fill. Digging deeper, the survey found that 26 percent reported few qualified applicants for their open positions, and 17 percent reported none.