Small business owner optimism is at a 6-month low – here’s why

The end of the government shutdown may come just in time for small businesses, which have reported hiring difficulties, slowing sales and weak profits amid the business shutdown, a closely watched survey of business owners found.

“The shutdown will be resolved by the end of the year, hopefully sooner, but until then our economic measures will show a weak outlook for economic growth, slowing sales, and weak job growth,” the National Federation of Independent Business (NFIB) said in a report on its monthly survey of small businesses. “The owners are being flexible, but it won’t be fun until the lockdown ends and the government gets back to work.”

The NFIB Small Business Index fell slightly to 98.2 in October, falling for the second straight month and remaining just above the survey’s 52-year average. This is the lowest survey reading since the tariffs were announced in April.

The survey results come as the US government shutdown continues for the forty-second day, creating uncertainty about economic data and pressure on the country’s air travel system. The Senate on Monday approved a spending measure that would end the work stoppage, and the House is expected to vote on the measure on Wednesday.

“Although the outlook remains brighter than before the 2024 election, a lack of qualified workers coupled with deteriorating sales and profits appear to be weighing on the economic outlook,” Wells Fargo economists Jackie Benson and Ali Hajibegi wrote.

Nearly nine out of 10 owners reported they were unable to find qualified employees to fill open positions. The survey found that labor quality is the most important issue facing small business owners, especially in the construction industry, where nearly half of small business owners said they have jobs they cannot fill.

The proportion of owners reporting higher sales fell by six points in October, while the number of owners reporting higher profits fell by nine points. Business owner commentary included in the report showed that health insurance costs were a growing problem.

Despite the declines, the number of companies anticipating improved sales remained positive, while capital expenditure plans reached their highest levels during the year.

Business owners also said economic conditions were more stable in October. The survey’s uncertainty index fell 12 points to a reading of 88, the lowest level in a year marked by questions about tariffs and other changes in the business environment.

The survey also showed that inflation is cooling for small businesses, as the number of owners who raised rates in October or plan to raise rates in the next three months declined.