COLUMBUS, Ohio – The NFIB Small Business Optimism Index rose 0.5 points in August to 100.8, nearly 3 points above the 52-year average of 98. 

Of the 10 Optimism Index components, four increased, four decreased and two were unchanged. The increase in those expecting real sales to be higher contributed the most to the rise in the Optimism Index. The Uncertainty Index fell by 4 points to 93 but remained well above the historical average. The decline was due to a decrease in uncertainty about financing expectations and planned capital expenditures.

“Small employers are feeling more optimistic following the federal Small Business Deduction tax win in addition to stronger sales expectations and improved earnings,” said Jared Weiser, NFIB Ohio state director. “The biggest concern for small business owners continues to be the labor market and finding qualified employees for their open positions.”

As reported in NFIB’s monthly jobs report, a seasonally adjusted 32% of all small business owners reported job openings they could not fill in August, down 1 point from July. The last time unfilled job openings fell below 32% was in July 2020. Twenty-eight percent had openings for skilled workers (down 1 point), and 13% had openings for unskilled labor (up 1 point).

The difficulty in filling open positions is particularly acute in the construction, manufacturing and transportation industries. Nearly half (49%) of small businesses in the construction industry had a job opening they could not fill, down 6 points from July and 11 points below last year’s level. This suggests a softening in the job market. Openings were the lowest in the wholesale and finance industries.

A seasonally adjusted net 15% of owners plan to create new jobs in the next three months, up 1 point from July and the third consecutive monthly increase, a positive trend but historically low.

Of the 53% of owners hiring or trying to hire in August, 81% reported few or no qualified applicants for the positions they were trying to fill. Twenty-six percent of owners reported few qualified applicants for their open positions (down 3 points), and 17% reported none (down 2 points).

In August, 21% of small business owners cited labor quality as their single most important problem, unchanged from July and remaining the top single most important problem. Labor costs reported as the single most important problem for business owners fell 1 point from July to 8%.

Seasonally adjusted, a net 29% reported raising compensation, up 2 points from July. A seasonally adjusted net 20% plan to raise compensation in the next three months, up 3 points from July.

Of those making expenditures, 37% reported spending on new equipment, 22% acquired vehicles and 17% improved or expanded facilities. Thirteen percent spent money on new fixtures and furniture, and 5% acquired new buildings or land for expansion.

Over half (54%) of small business owners reported that supply chain disruptions were affecting their business to some degree, down 10 points from July. Three percent reported a significant impact (down 1 point), 15% reported a moderate impact (down 2 points), 36% reported a mild impact (down 7 points) and 44% reported no impact (up 8 points).

Looking forward to the next three months, seasonally adjusted, a net 26% plan to increase prices, down 2 points from July. The net percent of owners raising average selling prices fell 3 points from July to a net 21%, seasonally adjusted, the lowest reading of this year.

Other findings include:

  • There was a notable improvement in overall business health. When asked to rate the overall health of their business, 14% reported excellent (up 1 point), and 54% reported it as good (up 2 points). Twenty-seven percent reported the health of their business as fair (down 4 points), and 4% reported poor (unchanged).
  • The net percent of owners expecting higher real sales volumes rose 6 points from July to a net 12% (seasonally adjusted). This component contributed the most to the Optimism Index’s increase.
  • The net percent of owners raising average selling prices fell 3 points from July to a net 21% (seasonally adjusted), the lowest reading of this year.