Hawkeye Reporter

The National Federation of Independent Business (NFIB) has reported a rise in its Small Business Optimism Index, which increased by 0.3 points to 91.5 in September. Despite the rise, the index remains below the 50-year average for the 33rd consecutive month. Meanwhile, the Uncertainty Index has reached an all-time high of 103, showing small business owners' growing concerns.

"Small business owners are feeling more uncertain than ever," said NFIB Chief Economist Bill Dunkelberg, explaining how uncertainty discourages investment and inventory expansion amid inflation and rising financing costs. Dunkelberg noted that while there is cautious optimism about the upcoming holiday season, many business owners are unsure about future improvements in conditions.

Matt Everson, the NFIB Iowa State Director, expressed that "with the Uncertainty Index at an all-time high of 103, many of Iowa’s small businesses are hesitant to make long-term investments." He also pointed out that the fall in inventory gains indicates potential challenges for Iowa’s Main Street businesses.

Several key findings from the NFIB report highlight the challenges small businesses face. The percentage of business owners reporting inventory gains dropped by four points to a net negative 13%, the lowest since June 2020. The average interest rate on short-term loans rose to 10.1%, a figure not seen since February 2001. Thirty-four percent of owners experienced difficulty filling job openings, a decrease of six points from last month and the lowest since January 2021.

Moreover, a net 12% of owners were paying a higher rate on recent loans, the lowest in over a year. Capital outlays also declined, with 51% of owners reporting such spending over the past six months. Within those expenditures, 35% was spent on new equipment, 23% on acquiring vehicles, and 15% went toward improving facilities. Plans for future capital outlays dropped by five points to 19%.

The challenges extend to sales as well, with a net negative 17% of owners reporting decreased nominal sales over the last three months, the lowest this year. However, expectations for real sales volumes slightly improved to a net negative 9%. Twenty-three percent of owners reported inflation as their top operational issue, despite a slight decrease from August.

In terms of pricing, a net 22% of owners increased average selling prices, with significant hikes in sectors like finance and retail. Labor cost and labor quality remain significant concerns, as 17% cited labor quality as their main business issue following inflation.

The NFIB's monthly jobs report also emphasized ongoing hiring challenges, with 34% struggling to fill positions and 90% of those hiring reporting a lack of qualified candidates.

The NFIB Research Center has been conducting these surveys since 1973, and the September 2024 data draws from NFIB membership responses collected during that month.