Minnesota State Wire

The National Federation of Independent Business (NFIB) Small Business Optimism Index saw a decline of 2.5 points in August, reaching 91.2 and erasing the gains made in July. This marks the 32nd consecutive month that the index has remained below the 50-year average of 98. The Uncertainty Index increased to 92, its highest since October 2020. Inflation continues to be a major concern for small business owners, with 24% identifying it as their top operating issue.

"The mood on Main Street worsened in August, despite last month’s gains," stated NFIB Chief Economist Bill Dunkelberg. "Historically high inflation remains the top issue for owners as sales expectations plummet and cost pressures increase. Uncertainty among small business owners continues to rise as expectations for future business conditions worsen."

John Reynolds, NFIB State Director, expressed concerns about the impact on Minnesota's small businesses: "The recent drop in the Small Business Optimism Index is troubling for small businesses in Minnesota and around the country. Main Street continues to feel the lasting effects of inflation, workforce shortages, and shrinking margins."

Key findings from the report include a net negative profit trend at -37%, marking a seven-point decrease from July and hitting its lowest point since March 2010. Twenty-four percent of owners reported inflation as their primary problem, while expectations for higher real sales volumes fell by nine points to a net negative 18%.

A seasonally adjusted net 20% plan to raise compensation over the next three months, reflecting an increase of two points from July. Meanwhile, reports of job openings that could not be filled rose by two points to a seasonally adjusted 40%.

In terms of capital expenditures over the past six months, 56% of owners reported making outlays—an increase of two points from July—with spending primarily directed towards new equipment and vehicles.

Despite these challenges, only four percent identified financing as their top business problem in August.

The NFIB Research Center has been collecting data on Small Business Economic Trends through quarterly surveys since late 1973 and monthly surveys since 1986. This latest survey was conducted in August 2024.