Great Lakes Wire

The NFIB Small Business Optimism Index fell by 2.0 points in September to 98.8, marking the first decline in three months. Despite the decrease, the index remains above its long-term average of 98. The Uncertainty Index increased by 7 points to 100, which is among the highest readings in the past five decades.

NFIB Michigan State Director Amanda Fisher commented on the current climate for small businesses: “Supply chain disruptions, hiring challenges, and rising prices are leaving small business owners nationwide feeling less optimistic. In Michigan, owners are also concerned about the Michigan Legislature burdening them with additional taxes and expenses.”

Key findings from the September survey show that supply chain and inflation issues remain prominent concerns. The percentage of owners raising average selling prices increased to a net 24%, while 31% plan further price hikes in the coming months. Fourteen percent of owners identified inflation as their most pressing issue, an increase from August. Sixty-four percent reported supply chain disruptions, up by 10 points compared to the previous month.

Inventory levels also saw notable changes, with a net negative 7% of owners viewing current stocks as “too low,” the largest monthly drop recorded in the survey’s history. Actual earnings improved slightly, reaching their highest level since December 2021. However, expectations for better business conditions declined sharply, with only a net 23% expecting improvement.

Labor remains a challenge for small businesses. Eighteen percent cited labor quality as their primary concern, tied with taxes. Thirty-two percent of owners reported job openings they could not fill, consistent with August’s figures. Among those hiring or trying to hire, most reported few or no qualified applicants. Plans to create new jobs have increased for four consecutive months and are now at their highest since January.

Labor costs as a primary concern rose to 11%. Thirty-one percent reported raising compensation, while 19% plan further increases in the next quarter.

Capital investment remained stable, with 56% reporting outlays over the past six months. Expenditures focused on new equipment, vehicles, facility improvements, fixtures, and some on new buildings or land. Plans for future capital spending remain historically weak.

Sales figures indicate more firms are seeing declines than gains, and fewer owners expect higher real sales volumes going forward. Inventory gains increased modestly, but planned investment in inventory was unchanged.

Price increases continue to exceed the historical average, indicating ongoing inflationary pressures. Reports of positive profit trends improved but remain in negative territory overall. Weaker sales and rising material costs were among the top reasons cited for lower profits, while increased sales volume and seasonal changes drove higher profits for others.

Access to credit appears to be tightening, with more owners finding it harder to secure loans and facing higher interest rates. Regular borrowing has increased slightly among respondents.

Assessments of overall business health have not changed significantly. Eleven percent rate their business health as excellent and 57% as good, while 27% rate it as fair and 4% as poor.

Only 11% believe it is currently a good time to expand their business, a relatively low figure. Taxes and labor quality were each named as the single most important problem by 18% of owners. Concerns about government regulation have decreased slightly.

Other persistent issues include poor sales and competition from larger businesses. The cost or availability of insurance and financing or interest rates remain minor but steady concerns among respondents.

The NFIB Research Center has conducted this Small Business Economic Trends survey since 1973 and releases results monthly using responses from randomly selected NFIB members.