The Sconi

The NFIB Small Business Optimism Index saw a decline of 2.5 points in August, dropping to 91.2 and erasing the gains made in July. This marks the 32nd month in a row that the index has remained below its 50-year average of 98. The Uncertainty Index also rose to 92, reaching its highest level since October 2020. Inflation continues to be the primary concern for small business owners, with 24% identifying it as their top operational issue, a slight decrease from July.

NFIB Chief Economist Bill Dunkelberg commented on the situation: “The mood on Main Street worsened in August, despite last month’s gains. Historically high inflation remains the top issue for owners as sales expectations plummet and cost pressures increase. Uncertainty among small business owners continues to rise as expectations for future business conditions worsen.”

In Wisconsin, this trend presents significant challenges according to NFIB State Director Bill G. Smith: “The Small Business Optimism Index’s recent drop poses a considerable challenge for Wisconsin. Factors like inflation and rising costs strain their financial resources, making it difficult for small business owners to invest in their operations or expand their workforce. Lawmakers must continue to support policies that can foster a more stable environment for Wisconsin small businesses.”

Key findings from the report indicate several areas of concern:

- Reports of positive profit trends were at a net negative 37%, seven points worse than July and the lowest since March 2010.

- A net negative 18% of owners expect higher real sales volumes.

- Compensation plans are set to increase with a seasonally adjusted net 20% planning raises over the next three months.

- The net percent of owners raising average selling prices decreased by two points from July.

Job openings remain an issue, with a seasonally adjusted 40% of all small business owners reporting unfilled positions during August, an increase from July's figures.

Capital outlays have seen some movement; fifty-six percent reported expenditures in the past six months with investments primarily in new equipment and vehicles.

Sales trends show mixed results; while some report increased volumes due to seasonal changes or higher selling prices, others cite weaker sales and rising material costs as reasons for lower profits.

Borrowing needs seem largely satisfied among respondents, though there is an uptick in those finding it harder to secure loans compared to previous attempts.

Overall, financing was cited by four percent as their top problem, reflecting only a minor change from earlier reports.

This data comes from surveys conducted by NFIB’s Research Center which has been tracking Small Business Economic Trends since 1973 through quarterly surveys and monthly updates since 1986. The survey was conducted throughout August 2024.