Owners expecting business conditions to improve hits lowest level in the 48-year history of NFIB polling
NFIB’s monthly Small Business Economic Trends (SBET) report found that inflation has become the number one problem facing small business owners in March. In addition, the number of owners expecting business conditions to improve in the near future has fallen to the lowest level in the 48-year history of the Small Business Economic Trends report.
“Inflation has impacted small businesses throughout the country and is now their most important business problem,” said NFIB Chief Economist Bill Dunkelberg. “With inflation, an ongoing staffing shortage, and supply chain disruptions, small business owners remain pessimistic about their future business conditions.”
Small business owners expecting better business conditions over the next six months fell fourteen points to a net negative 49%. This is the lowest number on record. The report also showed a 2.4-point decrease in small business owners’ optimism, bringing the monthly Optimism Index to 93.2. This is the third consecutive month below the 48-year average of 98.
Thirty-one percent of owners reported that inflation was the single most important problem in their business, up five points from February and the highest reading in over 40 years. As of March, inflation has surpassed labor quality as the largest issue facing owners.
A major challenge for small businesses this year is the ongoing and unprecedented labor shortage. Forty-seven percent of owners reported job openings that could not be filled, a one-point decrease from February. Despite this slight decline, the number of owners with unfilled positions is still more than double the 48-year-historical average of 22%.
Forty-nine percent of owners report raising compensation, down one point from January’s 50% reading – which was the highest reading on record. In addition, 28% plan to raise compensation over the next three months, a two-point increase from February.
Another key finding is the number of owners who have hiked prices to compensate for inflation and higher wages, a net 72%. This is another record-breaking figure, the highest in the survey’s history. These price hikes were especially common in the wholesale, construction, agriculture, and retail sales industries.
A net 20% of owners reported that they plan to create jobs in the next three months, a one point increase from February. Labor quality is the second largest issue facing owners with 22% of respondents naming it as their top problem. Labor costs were the top problem for 8% of respondents.
You can read the full March Small Business Economic Trends report here.
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