The small business optimism index increased slightly to 100.1 in August, rising by 0.4 points over July, even as employers struggled to fill job openings.
Half of the firms surveyed by the National Federation of Independent Business reported positions that they could not fill in the current period, much higher than the historical average of 22% over the 48 years of the index.
To deal with labor shortages, a record 41% of small businesses raised compensation in August, up by 3 percentage points from July, while the share of firms that plan to increase compensation continued to stay elevated at 26%, down 1 point from the prior month.
High input prices continued to affect small firms’ decisions to raise prices as 49% of surveyed owners reported higher selling prices, up 3 percentage points from July.
Still, more firms reported lower positive profit trends, resulting in 15% fewer firms stating that they saw an increase in profit trends in August compared to July, mainly because of higher input and labor costs, and weaker sales.
Those sales were expected to decline in the upcoming months as the net percentage of owners expecting higher real sales volumes declined by 2%.
Overall, small business sentiments in August were consistent with the bigger picture of the economy since July as consumer demand decelerates and supply constraints persist because of the resurgence of the delta variant.
For more information on how the coronavirus pandemic is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.