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NFIB Quarterly Report Reflects Small Businesses’ Hopes to Add Workers Despite Diminished Economic Expectations

  • NFIB report shows second quarterly decline in small business optimism
  • Businesses in construction, manufacturing, retail, and services sectors show increased expectations of hiring workers and making capital outlays, but are unlikely to consider it a good time to expand
  • Optimism improves slightly in the construction sector

Summary by Dirk Langeveld

Economic expectations for small business owners slid leading into the fall, according to the latest quarterly report from the National Federation of Independent Business Research Center. At the same time, these firms are increasingly looking to hire workers and make capital outlays to improve operations at their company.

The report focuses on the construction, manufacturing, retail, and services sectors. The overall optimism index for the third quarter of 2021 was 98.2, down 1.5 points from the second quarter. This was the second consecutive decline in the index, which fell 2.8 points in the previous quarter and erased most of a 2.9-point gain in the first quarter.

“Small businesses in every industry are facing challenges like the staffing shortages and supply chain disruptions, which is impacting owners’ optimism,” said Holly Wade, executive director of NFIB’s Research Center. “Owners are working hard to attract the right workers to their open positions and meet the demands of their customers.”

A net negative share of 37 percent expected the economy to improve in the next six months, down 17 points from the second quarter. Forty-nine percent of small businesses had job openings, with 26 percent planning to add jobs in the next three months. Thirty-one percent were planning to make capital outlays in the near future.

Economic optimism was down in each sector. The share expecting the economy to improve was down 13 points in manufacturing and construction to net negative shares of 29 percent and 33 percent, respectively; down 22 points to a net negative share in retail; and down 26 points to a net negative share of 45 percent in services.

Thirty-one percent of construction employers said they plan to hire workers in the next three months, up three points from the previous quarter. Forty-one percent of manufacturers had the same plans, unchanged from the previous quarter. The share planning to hire fell one point in retail to 23 percent and five points in services to 24 percent.

Forty percent of manufacturers and 32 percent of construction companies plan to make capital outlays, up nine points and seven points, respectively. The share expecting to make capital outlays was up eight points to 29 percent in retail and seven points to 28 percent in services.

Few of these companies considered it a good time to expand their business, however. These included 13 percent in construction (up one point), 13 percent in manufacturing (down four points), 8 percent in services (down seven points), and 5 percent in retail (down five points).


The construction sector was the only one in the report with an improvement of its optimism index, which was up 0.9 points compared to the previous quarter to reach 99.8. This was 1.6 points above the overall optimism index.

Construction companies had the highest share of unfilled job openings at 62 percent. Fifty-nine percent of the openings were for skilled workers, and 65 percent of these businesses said they were getting few or no qualified applicants.

Sixty-five percent of construction businesses said they were increasing their prices. Despite higher material costs, the share expecting higher earnings rose three points to a net negative 19 percent.

Low interest rates have been helping to fuel demand for construction projects, but ongoing challenges in finding workers have been inhibiting construction companies’ ability to begin projects.


The manufacturing optimism index stood at 101.8, down 3.4 points but still 3.6 points above the overall index.

Fifty-seven percent of manufacturers said they had unfilled job openings, the second highest share after construction. The net share of 41 percent expecting to create jobs in the next three months was 15 points higher than the overall small business economy.

Despite the higher optimism, future sales expectations were down 16 points compared to the previous quarter. A net negative share of 7 percent said the expect higher sales in the next three months.


The optimism index for the retail sector matched the overall index at 98.2, although this was down 2.3 points from the previous quarter.

Fifty-two percent of retailers had job openings available, up two points from the previous quarter. However, earnings expectations were down five points, with a net negative share of 14 percent expecting improvement, and the share of retailers planning to increase employment fell one point to 23 percent.

The sector was experiencing greater inventory challenges, with 17 percent saying they considered current inventory levels too low – nearly twice the overall share of 9 percent. A net share of 15 percent of retailers said they plan to increase their inventories over the next six months, while just 7 percent of overall businesses do.

NFIB says that while consumer spending patterns are strong, supply chain disruptions and staffing shortages are limiting small retailers’ ability to capitalize on this trend.


The services industry had the strongest dip in optimism, with its score falling 5.5 points to 94.7. This was 3.5 points lower than the overall index.

A net negative share of 21 percent expect improved earnings, down 13 points from the second quarter. The share of service businesses concerned about sales over the next three months fell nine points to a net negative 10 percent.

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