Small business optimism increased last month amid stronger sales expectations, according to the National Federation of Independent Business. .The NFIB Small Business Optimism Index increased 0.5 points to 100.8, nearly three points above its 52-year average of 98. Labor quality continued to be a top challenge, with 21 percent citing it as their top issue. Thirty-two percent of small businesses were unable to fill open positions, with challenges especially in construction, manufacturing and transportation. Despite the shortage, more small business owners expect to add jobs in the coming months, according to the report. Owners expecting improved business conditions fell 2 points from July to a net 34 percent. Fourteen percent reported favorable conditions for business expansion last month, down two points from July. The index tracking uncertainty fell four points to 93 but remained much higher than the historical average. The NFIB attributed the uncertainty to the variability in potential financing expectations and planned capital spending. “Optimism increased slightly in August with more owners reporting stronger sales expectations and improved earnings,” said NFIB Chief Economist Bill Dunkelberg. Sixty-eight percent of owners rated their business as being in either excellent or good condition, higher than in July. The sales outlook improved, with the net share of owners anticipating higher real sales volumes increasing six points to 12 percent. Owners increasing average selling prices dropped 3 points to a net 21 percent, its lowest reading this year. Reports of positive profit trends reached a nearly 2 ½-year high amid higher sales volumes and seasonal changes. The average interest rate on short-term loans fell to 8.1 percent, its lowest mark since May 2023. Fifty-four percent of owners said supply chain disruptions were impacting their business, down 10 points from July. Forty-four percent reported no impact, up eight points from the previous month. Fifty-six percent made capital outlays in the past six months, up one point from July but still relatively low. Of those, 37 percent invested in new equipment, 22 percent acquired vehicles and 17 percent improved or expanded facilities.
