Survey: Small Business Uncertainty Index Rises, Inflation Top Concern

According to a new survey by the National Federation of Independent Business (NFIB), inflation remains a top concern among small businesses, but one component, the Uncertainty Index, rose an alarming nine points to 85, the highest reading since November 2020.
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Uncertainty among small business owners is at a near-record high, according to the results of the latest NFIB survey. // Stock photo

According to a new survey by the National Federation of Independent Business (NFIB), inflation remains a top concern among small businesses, but one component, the Uncertainty Index, rose an alarming nine points to 85, the highest reading since November 2020.

For the month of May, 22 percent of owners reported that inflation was their single most important problem in operating their business, unchanged from April and the top business problem among owners.

“Small businesses are responsible for the production of more than 40 percent of GDP and employment, a crucial portion of the nation’s economy, and employ half of the workers in Michigan,” says Amanda Fisher, state director of the NFIB.

“For 29 consecutive months, small business owners have expressed historically low optimism, and their expectations about future business conditions are at the worst levels seen in 50 years. Michigan’s small business owners aren’t going to reinvest in their businesses or expand unless they’re reasonably certain those investments will pay off. Inflation, though, creates uncertainty. It drives up the cost of running a small business and lowers people’s spending limits.”

Key findings of the national survey include:

  • A net negative 8 percent (seasonally adjusted) of owners viewed current inventory stocks as “too low” in May, down four points from April and the lowest reading since October 1981.
  • Owners’ plans to hire rose three points in May to a seasonally adjusted net 15 percent, the highest reading of the year.
  • Seasonally adjusted, a net 28 percent plan price hikes in May, up two points from April.
  • Six percent of owners reported that financing was their top business problem in May, up two points from April. The last time financing as a top business problem was this high was in June 2010.

As reported in NFIB’s monthly jobs report, a seasonally adjusted net 18 percent plan to raise compensation in the next three months, down three points from April and the lowest reading since March 2021. Forty-two percent (seasonally adjusted) of all owners reported job openings they could not fill in the current period.

NFIB’s monthly Small Business Economic Trends (SBET) report measures America’s small business economy.

Used by the Federal Reserve, Congressional leaders, administration officials, and state legislatures across the nation, it’s regarded as the bellwether on the health and welfare of the Main Street enterprises that employ half of all workers, generate more net new jobs than large corporations, and gave most of us the first start in our working life.

The SBET (aka the Optimism Index) is a national snapshot of NFIB-member, small-business owners not broken down by state. More about the Uncertainty Index can be read here. The typical NFIB member employs 10 people and reports gross sales of about $500,000 a year.

The NFIB Research Center has collected Small Business Economic Trends data with quarterly surveys since the fourth quarter of 1973 and monthly surveys since 1986. Survey respondents are randomly drawn from NFIB’s membership. This survey was conducted in May 2024.

For 80 years, NFIB has been advocating on behalf of America’s small and independent business owners, both in Washington, D.C., and in all 50 state capitals. NFIB is nonprofit, nonpartisan, and member driven. It has been exclusively dedicated to small and independent businesses.

For more information, visit nfib.com/.