Small business optimism rose in October as the NFIB Small Business Optimism Index rose 2.2 points to 93.7, marking the 34th consecutive month the index remained below the 50-year average of 98. However, the NFIB Uncertainty Index rose seven points to a record high of 110. Main Street business owners, although showing improved confidence, continue to face challenges, particularly with sales, hiring, and inflation.
“With the election now over, small business owners will begin to feel uncertain about future business conditions,” said NFIB Chief Economist Bill Dunkelberg. “Although hope is growing on Main Street, small business owners are still facing unprecedented economic hardship. Low sales, unfilled job openings, and continued inflationary pressures continue to challenge High Streets, but owners remain optimistic as they head into the holiday season.”
Key Findings
- Marketing Trends: A negative total of 20% of small business owners reported the highest sales volume in the past three months, the lowest level since July 2020.
- Adjustment of Compensation: Seasonally adjusted, a total of 31% of owners reported increasing compensation, down one point from September. This is the lowest rate since April 2021.
- Sales Volume Expectations: The percentage of owners expecting higher actual sales prices rose five points to a net negative 4%, marking the highest reading of the year.
- Loan Estimates: A total of 5% of owners reported paying a higher amount on their most recent loan, down seven points from September and the lowest rate on record since January 2022.
- Job Openings: Thirty-five percent of owners reported unfilled job openings in October, up one point from September.
- Inflation: Twenty-three percent of owners identified inflation as the most important business problem, unchanged from September and remaining a top issue.
The NFIB’s monthly jobs report also highlighted hiring challenges, with 35% of seasonally adjusted employers reporting job openings they cannot fill. Among the 53% of owners who were hiring or trying to hire, 87% reported few or no qualified applicants for available positions.
Capital Expenditure and Inventory Management
- Capital Expenditure: Fifty-four percent of owners reported a major expense in the past six months, a three-point increase from September. Of those, 35% invested in new machinery, 23% invested in vehicles, and 14% invested in improved or expanded facilities.
- Future Money Plans: Twenty-two percent of owners plan to pay in the next six months, up three points from September.
- Levels of Creativity: A negative total of 9% of owners reported inventory gains, with 10% reporting increased stocks and 18% reporting reductions.
- Inventory Outlook: A negative 2% of owners consider their stocks to be “very low,” while a similar negative 2% plan to invest in inventory in the coming months.
Pricing, Profitability, and Access to Credit
- Price Adjustment: The overall percentage of owners raising average sales prices decreased by one point to 21%. Price increases were most common in the financial (53%), retail (38%), construction (35%), and services (35%) sectors. Adjusted periodically, 26% of owners plan to raise prices in the coming months.
- Profit trends: A negative total of 33% of owners reported positive profit trends, up one point from September. Among those reporting lower profits, 39% say it is due to weak sales, while 16% cite higher material costs, 12% point to labor costs, and 7% mention lower retail prices.
- Credit Terms: Two percent of owners reported unsatisfied borrowing requirements, while 23% reported all credit requirements were met, and 64% said they were not interested in borrowing money. A total of 6% found a recent loan more difficult to obtain than in the past, with only 3% citing funding as their biggest business concern.
Survey Background
The NFIB Research Center has tracked small business economic trends since 1973 through quarterly surveys and monthly surveys since 1986. The survey, conducted in October 2024, takes a random sample of the NFIB membership and is released on the second Tuesday of each month.
