Construction and Manufacturing Industries Hit Hardest by Inflation Among Four Key Industry Groups

Date: June 01, 2022

Optimism falls in four key industries surveyed

On May 18, the NFIB Research Center released a quarterly Small Business Economic Trends industry report that focuses on the current state of business operations in four key industries: Construction, Manufacturing, Retail, and Services.  

The overall NFIB Small Business Optimism Index score was at 93.2, with significant differences between industries. “The construction and manufacturing industries are especially feeling the impact of inflation pressures,” said Holly Wade, Executive Director of NFIB’s Research Center. “Optimism among these industries varies due to their unique set of circumstances and the degree to which inflation, supply chain disruptions, and a staffing shortage are impacting their business.” 

In the Construction Industry, the Optimism Index dropped significantly to 92.3, seven points lower than the previous industry report in January and the lowest score of the four industries. These small businesses have been hit particularly hard by the ongoing hiring crisis: nearly three-fifths of all industry small businesses (59%) said that they had unfilled job openings.  

These unfilled positions have led to an inability for firms to form work teams and begin permitted projects to meet the current demand. Earnings remain low in construction, with a net negative 20% reporting increased earnings – meaning that the number of owners whose earnings fell was 20 points higher than the number of owners whose earnings increased. This is a 5-point increase from January, however. 

The Manufacturing Industry continues to show the highest level of optimism of the featured industries, with an Optimism Index of 99.1, two points lower than January. A net negative 2% report that they expect higher sales in the next few months compared to the overall reading of net negative 12%.  

Like Construction, Manufacturing was hit particularly hard by the labor shortage with 53% of all firms reporting unfilled job positions, six points above the average across all firms. A net 28% of firms say they plan to create new jobs soon, eight points higher than the overall figure but a seven-point decrease from January. 

In the Retail Industry, the Optimism Index was 93.4, four points down from January. Earning trends fell three points to a net negative 18%, while expectations for economic conditions over the next six months fell 18 points to a net negative 47%.  

Inventory was a concern in Retail, with a net 8% reporting that their current inventory levels are “too low” compared to a net 6% of all small businesses. A net 5% intend to increase their inventories soon, four points higher than the reading for the overall population.  

Lastly, the Services Industry saw a decrease of 2.6 points to their Optimism Index, for a total of 94.2. This industry was marked by decreased expectations that the economy will improve, with the percent of owners expecting better sales falling 7 points since January to a net negative 9%.  

You can read the full industry-specific SBET report here. Small businesses continue to face the many challenges in front of them while Congress considers additional taxes and mandates on Main Street. Tell your members of Congress to vote no on any such new taxes or mandates. 

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