Small business optimism inched down last month amid deteriorating earning trends, according to the National Federation of Independent Business..Released Nov. 11, the Small Business Optimism Index slipped 0.6 points to 98.2, just above its 52-year average of 98 amid the government shutdown and pending election earlier in November. The drop caused the index tracking the frequency of positive profit trend reports to fall nine points to a net negative 25 percent. Sparked by a drop in owner uncertainty over their expansion outlook, NFIB’s Uncertainty Index fell 12 points to 88—its lowest level this year, though still higher than historical standards.“Business health declined from the previous month as fewer owners reported it as good and more reported it as fair,” according to NFIB. Labor markets remained tight. Thirty-two percent of owners had job openings they could not fill — the second straight month at that level. More than a quarter of owners cited labor quality as their single biggest business problem, up 9 points from September and the highest reading since late 2021.Thirty-two percent of owners had job openings they could not fill, unchanged from September. Fifty-six percent were either hiring or trying to hire in October, down two points from the previous month. The vast majority of those hiring or trying to hire had “few or no qualified applicants” according to NFIB. A net 15 percent of owners expect to create new positions in the next three months, marking the first pullback since hiring intentions began improving in May. Owners’ assessments of their own business health weakened last month. More described conditions as “fair,” with fewer as “good,” and the share rating their business as “excellent” only slightly edged up. A net 26 percent of owners raised compensation last month, down five points from September, though planned wage hikes remained steady. Profit trends worsened: The net share of owners reporting profit declines fell nine points to negative 25 percent, the largest contributor to the dip in overall optimism.Capital outlays were modest, with 55 percent of owners reporting recent spending — down one point from September — as equipment purchases dipped. Twenty-three percent plan capital expenditures over the next six months, a slight improvement but relatively weak compared to past expansions.Price increases moderated, according to the report, with the net share of owners raising selling prices dropping to 21 percent. Sales trends were lackluster, according to NFIB. A net negative 13 percent of owners had higher sales over the past three months, with fewer expecting real sales growth. Inventory levels were under pressure, with a net negative 6 percent anticipating inventory gains and plans for future investment dropping.
