Small business owners faced a tough August. Their optimism took a nosedive after a brief uptick in July.
The National Federation of Independent Business (NFIB) reported that its Small Business Optimism Index dropped to 91.2 in August from 93.7 in July.
The biggest worry? Profits. Business owners felt worse about their earnings than they have in over 13 years. A whopping 37% reported negative profit trends. That’s the worst since March 2010.
Here’s a breakdown of what’s causing the profit squeeze:
- Weak sales (31% of owners cited this)
- Higher costs
- Slower customer spending
Sales expectations also took a big hit. They fell 9 points from July, with 18% of owners expecting lower sales.
This gloomy outlook is a key reason for the overall drop in optimism.
It’s not all bad news though. Expectations about future business conditions are still better than earlier this year. But they did slip 6 points in August, cooling some of July’s optimism.
Uncertainty is also on the rise. The NFIB’s Uncertainty Index hit its highest level since October 2020. It jumped 10 points since June. This shows that many business owners are unsure what the future holds.
So what’s next for small businesses? It’s hard to say. The quick shift from July’s hope to August’s worry shows how fast things can change.
For now, many owners are tightening their belts and hoping for better days ahead.
