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The
National Federation of Independent Business (NFIB) said on
Tuesday its Small Business Optimism Index dropped 2.5 points to
91.2 last month. The index had surged in July to the highest
reading since February 2022.
Small business owners tend to lean Republican and some
economists had viewed the jump in sentiment as largely driven by
politics and a stock market rally following then-Democratic
Party candidate President Joe Biden's poor debate performance
against Republican Party candidate Donald Trump.
Economists had anticipated a reversal after Biden dropped out of
the White House race and handed the baton to Vice President
Kamala Harris. Trump and Harris are locked in a tight contest,
and the stock market has been lackluster.
The survey's Uncertainty Index increased 2 points to 92, the
highest since October 2020. The share of businesses expecting
higher inflation-adjusted sales volumes in the next three months
fell 9 points to -18%.
"Clearly, 'uncertainty' has been on the rise," said NFIB Chief
Economist Bill Dunkelberg. "And the stock market is expressing
some unease ... and the election is just weeks away."
Though business owners continued to worry about inflation, the
share ticked down and fewer reported raising average selling
prices. But labor shortages remain a challenge for small
businesses, even as job openings in the nation have declined,
resulting in a rise in the share of owners planning to raise
compensation in the next three months.
Forty percent of all owners reported job openings they could not
fill in August, up 2 points from July. Most of the unfilled
positions were for skilled workers, and were concentrated in the
transportation, construction and manufacturing sectors.
Job creation plans, however, continued to decline. That is in
line with the slowdown in nonfarm payrolls gains.
The share of owners planning capital investment increased, with
many of them buying new equipment, improving or expanding
facilities. A very small minority reported that financing was
their top business problem.
The Federal Reserve is expected to cut interest rates next week,
kicking off its easing cycle with a 25 basis points reduction.
The U.S. central bank has kept its policy rate in the current
5.25%-5.50% range for more than a year, having raised it by 525
basis points in 2022 and 2023.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)
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