Small Business Optimism Drops as Profits Decline

Optimism among America’s small businesses fell last month amid labor and profit headaches.

That’s according to the October edition of the National Federation of Independent Business (NFIB) Small Business Optimism Index, released Tuesday (Nov. 11), and showing a 0.6 point decline in October to 98.2. That’s still above the 52-year average of 98.

Meanwhile, the NFIB’s Uncertainty Index fell 12 points from September to 88, marking the lowest reading of the year.

“Optimism among small businesses declined slightly in October as owners report lower sales and reduced profits,” Bill Dunkelberg, the NFIB’s chief economist, said in a news release. “Additionally, many firms are still navigating a labor shortage and want to hire but are having difficulty doing so, with labor quality being the top issue for Main Street.”

According to the report, 32% (seasonally adjusted) of businesses had job openings they were unable to fill for the second month in a row, marking the highest figure of vacancies in almost five years.

Meanwhile, 27% of small businesses pointed to labor quality as their top issue, a nine-point increase from the prior month and the highest level since a record 29% in November 2021.

The survey also found that the frequency of reports of positive profit trends dipped nine points from September to a net negative, seasonally adjusted 25%.

“This component contributed the greatest to the decline in the Optimism Index,” the NFIB said.

In other small business news, recent PYMNTS Intelligence research finds that 58% of small and medium sized businesses (SMBs) say that inflation is their top challenge.

This trend, PYMNTS wrote earlier this week, has led to an uptick in “demand for embedded credit and working capital tools that can accelerate cash conversion and reduce reliance on traditional lenders.”

Against this backdrop, the embedded B2B finance market is projected to quadruple from $4.1 trillion today to $15.6 trillion by the end of the decade, spotlighting the way financial functionality is becoming native to software instead of external to it.

“This shift is changing how platforms think about growth,” the report continued. “Where consumer embedded finance centered on checkout convenience, B2B players see financial orchestration as a revenue engine. Embedding payments into accounting and procurement software eliminates manual reconciliation and creates sticky, recurring income.”