Inflation, labor shortages remain problematic
Optimism continues to decrease among small business owners due to inflation and labor scarcities, according to a recent report by the National Federation of Independent Business.
The National Federation of Independent Business (NFIB) found in its most recent Small Business Optimism Index report that inflation and staff shortages remain top problems for small businesses. It also found that overall optimism decreased in September, representing the 21st consecutive month below a 49-year average.
Twenty-three percent of business owners claimed that inflation was their single most important problem in operating their business, according to the report. This is the same percentage as when they were asked the month prior, although inflation was then tied with labor quality for the top concern.
“Owners remain pessimistic about future business conditions, which has contributed to the low optimism they have regarding the economy,” said NFIB Chief Economist Bill Dunkelberg. “Sales growth among small businesses has slowed and the bottom line is being squeezed, leaving owners few options beyond raising selling prices for financial relief.”
Another finding was that the percentage of small business owners expecting better business conditions over the next six months fell six points on the index from August to a net negative 43 percent (seasonally adjusted). This was still 18 percentage points better than last June’s reading of net negative 61 percent.
The report also found that 43 percent (seasonally adjusted) of owners reported job openings that were hard to fill. This was up three points from August and, as the NFIB points out, this remains historically high, with owners being unable to hire enough workers due to a lack of qualified applicants.
A seasonally adjusted net 23 percent of business owners intend to raise compensation in the next three months, according to the findings. This is down three points from the August numbers. The net percent of those raising average selling prices increased two points to a net 29 percent (seasonally adjusted). The NFIB says this is a “very inflationary” level.
The net percent of business owners expecting real sales to be higher did increase by a point from August to a net negative 13 percent (seasonally adjusted), a figure the NFIB considers to be “still a very dismal posture.”
In addition to the Optimism Index, the NFIB cited some numbers from its recent jobs report. For example, 43 percent (seasonally adjusted) of all small business owners reported job openings they could not fill in the current period. That number is three points higher than in August. Business owners plan to fill open positions, with 18 percent saying they plan to create new jobs in the next three months.
Thirty-six percent reported raising compensation in September, and a seasonally adjusted net 23 percent plan to do so in the next three months (down three points from August). Nine percent of owners cited labor costs as their top business problem (up one point from August), and 23 percent said that labor quality was their top business problem (down one point).
According to a recent report from the U.S. Census Bureau, inflation rates in the U.S. have decreased from pandemic era highs but are still elevated. The Bureau also acknowledged that this is a major concern among small businesses.
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