NFIB: Small Business Optimism Grows Amid ‘Plague’ of Cost Pressures

Small businesses in the United States are pessimistic about their prospects, but less pessimistic than two years ago.

The National Federation of Independent Business (NFIB) Small Business Optimism Index rose 2.2 points last month to 93.7, the highest reading since February 2022, according to a Tuesday (Aug. 13) press release.

Still, this is the 31st month in a row that the index has been below the 50-year average of 98, with small business owners continuing to feel pressured by inflation, the release said. One-quarter of business owners called it their biggest problem, up four points since June.

“Despite this increase in optimism, the road ahead remains tough for the nation’s small business owners,” NFIB Chief Economist Bill Dunkelberg said in the release. “Cost pressures, especially labor costs, continue to plague small business operations, impacting their bottom line. Owners are heading towards unpredictable months ahead, not knowing how future economic conditions or government policies will impact them.”

Thirty-three percent of business owners (seasonally adjusted) raised compensation in July, down five points from June and the lowest reading in more than three years, per the release.

In addition, the net percent of owners anticipating higher real sales volumes climbed four points in July to a net negative 9% (seasonally adjusted), the highest reading of this year, the release said. The net percentage of owners raising average selling prices dropped five points from June to a seasonally adjusted net 22%.

As PYMNTS wrote last month — following the release of another pessimistic NFIB report for June — the challenges facing small businesses have led to the emergence of new working capital products and financial services.

These offerings can provide “more innovative and flexible solutions designed to help insulate businesses from ongoing economic fluctuations such as inflation, interest rate changes and even currency volatility,” the report said

These innovations include products such as virtual and commercial cards, supply chain finance, invoice finance and asset-based lending, giving businesses faster access to funds, better cash flow management and the ability to invest in growth opportunities without having to take on traditional debt.

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