In the month of August, small business owners increasingly identified inflation as the single most important problem for them in operating their business, as elevated inflation continues to drive up expenses and lower profitability. In addition to inflation remaining a top problem for small businesses, small business owners have continued to struggle to fill open positions, with 38 percent of owners reporting openings they could not fill, up one point from last month. The Consumer Price Index (CPI) data, released earlier this month, showed the inflation rate declined slightly to 2.9 percent year over year, lower than originally forecasted. Core CPI, which excludes the more volatile measurements of food and energy, rose slightly by 0.2 percent from last month. The National Federation of Independent Business (NFIB) monthly Small Business Optimism Index rose by 2.2 points to 93.7, marking the highest reading seen all year, but the 31^st consecutive month spent below the 50-year average of 98. The Uncertainty Index rose by eight points to 90, returning to levels not seen since the pandemic when businesses were forced to shutter, signaling rising unease amongst small businesses. While uncertainty is on the rise, this month’s CPI report provides some hope for small businesses, coming in slightly cooler than expected. This coupled with the troubling jobs report seen earlier this month likely means that the Federal Reserve will be ready to start cutting interest rates at their meeting next month. While a rate cut will provide small businesses with some relief for borrowing costs, they are still facing prices over 20 percent higher than just a few years ago, continuing the challenging economic environment.

The below August 2024 Small Business Snapshot features numbers and updates to provide more insight into the current small business economy.

MAIN STREET MEASUREMENTS:

CONSUMER PRICE INDEX (INFLATION)

• The prices consumers paid for goods and services increased 0.2 percent in July as compared to June and totaled a 2.9 percent increase when measured over the last 12 months.

PRODUCER PRICE INDEX

• Wholesale prices increased 0.1 percent in July and had an increase of 2.2 percent year over year.

JOB OPENINGS

• At the end of June, businesses were unable to fill 8.2 million jobs, 3.3 million workers quit their jobs, and the number of layoffs and discharges changed little.

UNEMPLOYMENT RATE

• 114,000 jobs were created in July, and the unemployment rate rose to 4.3 percent.

LABOR FORCE PARTICIPATION RATE

• The labor force participation rate rose slightly to 62.7 percent in July.

UNEMPLOYMENT INSURANCE WEEKLY CLAIMS

• For the week ending August 10, 2024, the Department of Labor reported that initial unemployment claims were 227,000, a decrease of 7,000 from the previous week’s level.
  • The 4-week moving average of initial claims of initial claims totaled 236,500, down slightly from the previous week’s average.

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