The Economy

Small Business Optimism Declines in July

“Small business owners are losing confidence in the strength of the economy and expect a slowdown in job creation."
Matthew HellerAugust 10, 2021

Small business optimism over the U.S. economy declined in July, reflecting concerns over labor shortages and supply-chain disruptions, according to a closely-watched survey.

The National Federation of Independent Business said its Small Business Optimism Index fell 2.8 points last month to 99.7, reversing June’s 2.9 point gain.

The NFIB survey’s uncertainty index decreased seven points to 76 in June (indicating less uncertainty) while owners expecting better business conditions over the next six months dropped eight points to a net negative 20%.

Drive Business Strategy and Growth

Drive Business Strategy and Growth

Learn how NetSuite Financial Management allows you to quickly and easily model what-if scenarios and generate reports.

“Small business owners are losing confidence in the strength of the economy and expect a slowdown in job creation,” NFIB Chief Economist Bill Dunkelberg said in a news release. “As owners look for qualified workers, they are also reporting that supply chain disruptions are having an impact on their businesses. Ultimately, owners could sell more if they could acquire more supplies and inventories from their supply chains.”

The labor shortage is reflected in the survey’s finding that 57% of owners (or 93% of those hiring or trying to hire) reported few or no “qualified” applicants for the positions they were trying to fill in July, an increase of one point from the previous month.

Where there are open positions, labor quality remains a significant problem, the federation said. Thirty-one percent of owners reported few qualified applicants for their open positions (down 1 point) and 26% reported none, up 2 points and a 48-year record high.

Nine percent cited labor costs as their top business problem and 26% said labor quality was their top business problem, unchanged from June but remaining the top overall concern.

On the supply side, a record net 12% of owners viewed current inventory stocks as “too low” in July while more than 30% reported that supply chain disruptions have had a significant impact on their businesses. A net 6% plan inventory investment in the coming months, down 5 points from June’s historically high reading.

“Inventories are especially low and replenishment will contribute to economic growth as soon as supply chain disruptions get untangled,” the NFIB said.

Image by Free-Photos from Pixabay