Aug NFIB: Mixed On Job Mkt Tightness; Little Change In Inflation/Credit

The August NFIB small business survey Optimism Index printed 91.3, down 0.6pp and a touch below the expected 91.5. Many of the themes that have been prevalent this year were repeated in the August report, with most sub-categories relatively steady in comparison to the previous 3 to 6 months.

• The bifurcation between steady/strengthening "hard" index components (job creation plans, job openings, inventory plans, earnings, capex) vs depressed "soft" (expected biz conditions, expansion outlook, expected real sales / credit conditions, inventory satisfaction) continued. See chart.

The inflation, labor market, and credit conditions components will bear closest scrutiny - and they remained mixed. Quality of labor (cited by 24% of respondents) and Inflation (23%) remain the biggest problems for small businesses.

• Labor market results suggested some signs of loosening on the hiring side, offset by expected wage growth. While hiring plans ("increase" minus "decrease" in the next 3 months) were unchanged at a net 17%, in line with the averages of the previous 9 months, the "percent with positions not able to fill right now" slipped to 40% - lowest since Feb 2021 - from 42% the previous 2 months. Compensation changes slipped 2pp to a net 36%, joint-lowest since May 2021, but compensation plans rose to the highest net percentage of the year at 26% (+5pp).
• Inflation pressures remained salient but mixed. Net actual price changes ticked up 2pp to 27%, but that's the 2nd lowest since Mar 2021. Net price plans ticked up 3pp to 30%, the 2nd highest of the year, though below the 31%-to-54% range that prevailed for most of 2021-22.
• There were few signs of duress in credit availability. While interest rates paid remained high, loan availability vs 3 months ago improved to a net -4% from -6%, representing the least negative level since June 2022.

Source: NFIB August Survey