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The NFIB Small Business Optimism Index edged down 0.6 points to 98.2 in October, remaining slightly above the 52-year average of 98. October’s decrease was due primarily to a decline in earnings trends. Of the 10 components included in the index, four increased, five decreased and one stayed the same. Meanwhile, the Uncertainty Index fell 12 points to 88, the lowest reading of the year but still well above the 51-year average (68) and the average since 2016 (80).

Labor quality was cited as the top concern for small business owners, with 27% reporting it as the most important problem, up 9 points from September. Business owners continue to struggle to fill open positions despite openings trending down, with 32% of small business owners reporting jobs they could not fill in October, unchanged from September. The share of small business owners reporting taxes as a top problem declined 2 points from September to 16%, with some noting high county- and state-level taxes in particular. Meanwhile, inflation again ranked third in the list of concerns, with 12% reporting it as a top problem, down 2 points from September. Looking forward, a net 30% plan to increase prices over the next three months, down 1 point from September.

A net 26% of small business owners reported raising compensation, down 5 points in October after increasing 2 points in September. Meanwhile, 19% of business owners plan to raise compensation in the next three months, unchanged from September. Pressure on profitability worsened in October, falling 9 points from September to a net negative 25%. Among owners reporting lower profits, 33% blamed weaker sales, 16% cited increased material costs, 9% noted price changes for their product(s) or services(s) and 9% said labor costs. Meanwhile, 5% reported their last loan was harder to get than previous attempts, down 2 points from September, and a net 1% of owners cited paying a higher rate on their most recent loan, down 6 points from the prior month.

The outlook for general business conditions fell 3 points to 20%, still a positive read by historical standards. Additionally, 13% reported that it is a good time to expand their business, up 2 points from September, a rather weak reading compared to times of economic expansion. Overall, small business owners remain relatively optimistic, but uncertainty is still high, likely impacted further in October by elections and the government shutdown.