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Small-Business Owners Slightly More Optimistic as Year Ends

Majority polled increased prices in 2021 — and plan to again in future

WASHINGTON — The National Federation of Independent Business (NFIB) Small Business Optimism Index increased slightly in November, the organization reports, raising 0.2 points to 98.4. Of the 10 index components, four improved, four declined and two remained steady.

The NFIB Uncertainty Index, however, decreased four points to 63.

“The outlook for business conditions is not encouraging to small-business owners as lawmakers propose additional mandates and tax increases,” says NFIB Chief Economist Bill Dunkelberg. “Owners are also pessimistic as many continue managing challenges like rampant inflation and supply chain disruptions that are impacting their businesses right now.”

Key findings from the quarterly report included:

  • Owners expecting better business conditions over the next six months decreased one point to a net negative 38%, tied for the 48-year record-low reading. This indicator has declined 18 points over the past four months to its lowest reading since November 2012.
  • The net percentage of owners raising selling prices increased six points to a net 59% (seasonally adjusted), the highest reading since October 1979.
  • Seasonally adjusted, a net 54% of owners plan price hikes, up three points from October and a 48-year record-high reading.
  • Forty-eight percent of owners reported job openings that could not be filled, a decrease of one point from October.

The NFIB found that 55% of owners reported capital outlays in the last six months, down one point from October. Of those owners making expenditures, 39% reported spending on new equipment, 22% acquired vehicles, and 14% improved or expanded facilities. Six percent of owners acquired new buildings or land for expansion and 13% spent money on new fixtures and furniture. The report also states that 27% of owners plan capital outlays in the next few months, down four points from October.

A net negative 2% of all owners (seasonally adjusted) reported higher nominal sales in the past three months, up two points from October. The net percent of owners expecting higher real sales volumes increased two points to a net 2%.

RAISING PRICES, RAISING PAY

The NFIB found that the percentage of owners raising selling prices increased six points to a net 59% (seasonally adjusted), which is the highest reading since October 1979. The report went on to say that 3% (unadjusted) reported lower average selling prices and 59% reported higher average prices. Price hikes were the most frequent in wholesale (88% higher, 0% lower), construction (75% higher, 7% lower), and manufacturing (66% higher, 1% lower). Seasonally adjusted, a net 54% of owners plan price hikes, up three points from October and a 48-year record-high reading.

A net 44% (seasonally adjusted) of owners reported raising compensation, unchanged from October and a 48-year record-high reading. A net 32% plan to raise compensation in the next three months, also unchanged from October and a record-high reading. Ten percent of owners cited labor costs as their top business problem, while 29% said labor quality was theirs.

Two percent of owners reported that all their borrowing needs were not satisfied, 23% reported all credit needs were met and 65% said they were not interested in a loan. A net 2% reported their last loan was harder to get than in previous attempts.

The NFIB Research Center has collected Small Business Economic Trends data with quarterly surveys since the 4th quarter of 1973 and monthly surveys since 1986. Survey respondents are randomly drawn from NFIB’s membership.