Prairie State Wire

The National Federation of Independent Business (NFIB) Small Business Optimism Index increased by 0.5 points in August, reaching 100.8. This figure stands nearly three points above the long-term average for the past 52 years. Of the ten components measured by the index, four saw increases, four declined, and two remained unchanged. The most significant contributor to this rise was an increase in business owners expecting higher real sales.

The Uncertainty Index dropped by four points to 93 but still remains above its historical average. The decrease is attributed mainly to less uncertainty about financing expectations and planned capital expenditures.

“Optimism increased slightly in August with more owners reporting stronger sales expectations and improved earnings,” said NFIB Chief Economist Bill Dunkelberg. “While owners have cited an improvement in overall business health, labor quality remained the top issue on Main Street.”

“Small businesses continue to look for market opportunities as they navigate uncertainty and struggle to find qualified workers,” said NFIB Illinois State Director Noah Finley. “Illinois policymakers should avoid further tax increases and work to make it easier for employers to find, recruit, and train employees.”

Survey data from August shows that 14% of small business owners rated their business health as excellent—up one point from July—while 54% rated it as good, up two points. Those reporting fair business health fell by four points to 27%, while those rating it poor held steady at 4%.

Labor quality continues to be a pressing concern: 21% of small business owners named it as their top problem, maintaining its position from July. Thirty-two percent of owners reported job openings they could not fill—a slight decrease from July—and the lowest level since July 2020.

A net 12% of owners expect higher real sales volumes over the coming months, which is a six-point increase from July and the primary factor behind the optimism index’s rise. Inventory assessments also improved modestly.

Price pressures showed some easing; only a net 21% reported raising average selling prices—the lowest reading so far this year—and profit trends were less negative than in previous months.

Short-term loan rates averaged 8.1%, down from July’s figures and marking the lowest rate since May last year. Regular borrowing among small businesses decreased slightly; just under a quarter reported borrowing regularly—the lowest proportion since November 2021.

According to NFIB’s monthly jobs report, unfilled job openings remain challenging especially within construction, manufacturing, and transportation sectors—nearly half of construction firms reported positions they could not fill despite some improvement compared with last year.

Fifty-three percent of surveyed businesses were hiring or attempting to hire during August; among them, over four out of five cited few or no qualified applicants available for open positions.

Compensation trends showed incremental growth: a net 29% raised pay in August while a net 20% plan additional raises over the next three months.

Capital spending levels remain subdued historically even though there was a slight uptick compared with July: over half made capital outlays recently with most investments directed toward equipment purchases or facility improvements.

Supply chain disruptions continued but appear less severe than earlier in the summer—54% reported some degree of disruption compared with higher rates previously noted this year.

Inflation concerns persisted for many respondents but did not worsen further; taxes remain another key issue after labor quality according to owner responses.

The survey is conducted monthly by randomly selecting participants from NFIB membership nationwide and has been running continuously since quarterly surveys began in late-1973 before switching to monthly releases in 1986.