The Sconi

The National Federation of Independent Business (NFIB) reported a decline in the Small Business Optimism Index for August, dropping 2.5 points to 91.2, effectively undoing the gains made in July. This marks the index's 32nd month below the 50-year average of 98. Additionally, the Uncertainty Index rose to 92, its highest since October 2020. Inflation remains a significant challenge for small business owners, with 24% citing it as their principal concern, a slight decrease from July.

"The mood on Main Street worsened in August, despite last month’s gains," stated NFIB Chief Economist Bill Dunkelberg. He highlighted that high inflation is still a major issue as sales expectations decline and cost pressures intensify. "Uncertainty among small business owners continues to rise as expectations for future business conditions worsen," he added.

Bill G. Smith, NFIB State Director, emphasized the impact of these findings on Wisconsin, stating, "The Small Business Optimism Index’s recent drop poses a considerable challenge for Wisconsin." Smith attributed the strain on financial resources to factors like inflation and rising costs, complicating investment or workforce expansion for small business owners. He urged lawmakers to continue supporting policies that would create stability for Wisconsin's small businesses.

Key points from the report indicate that positive profit trends were at a net negative 37%, a seven-point drop from July, and the lowest since March 2010. The expectation for higher real sales volumes declined nine points to a net negative 18%. Notably, a net 20% of owners plan to raise compensation in the coming months, a slight increase from July.

NFIB's jobs report showed that 40% of small business owners had unfilled job openings, with 90% struggling to find qualified candidates. Moreover, 56% of owners reported capital outlays over the past six months, with investments in equipment, vehicles, and facility expansions noted.

Other significant data points included a stable net negative 9% in inventory gains, a reduced net negative 5% in inventory stock levels, and unchanged negative profit trends. Among owners with weaker profits, 31% cited weak sales, while 17% pointed to material costs.

Only a small proportion of owners, 3%, reported unmet borrowing needs, with 26% confirming all credit needs met and 60% expressing no interest in loans. A net 7% indicated difficulty in securing the last loan compared to previous attempts. A mere 4% highlighted financing as their primary business problem in August, a slight increase from July.

The NFIB Research Center, which has been collecting data since the late 20th century through both quarterly and monthly surveys, released the recent findings. The survey in question was conducted in August 2024.