January Report Shows Small Businesses Continue to Worry About Inflation

Date: February 13, 2024

Inflation remains a top business concern, and 39% of small business owners reported unfilled jobs, down 1% from December

Small business owners continue to face numerous economic challenges. In NFIB’s Small Business Economic Trends January survey, the NFIB Small Business Optimism Index decreased two points to 89.9. This is the 25th consecutive month below the 50-year average of 98. The last time the Index was at or above the average was in December 2021.

“Although consumer spending remains strong, small business owners cannot find enough workers to fill their open positions,” said NFIB Chief Economist Bill Dunkelberg. “Owners continue to raise compensation to retain and attract workers with the skills and willingness to do the job, but hiring remains a struggle in the tight labor market.”

Key findings of the report include:

  • Twenty percent of owners reported that inflation was their single most important problem in operating their business, down three points from December and one point behind labor quality as the top problem.
  • A net negative 12% of all owners (seasonally adjusted) reported higher nominal sales in the past three months, unchanged from December. The net percentage of owners expecting higher real sales volumes declined 12 points to a net negative 16%.
  • Small business owners expecting increased sales in the next three months declined 12 points from December to a net negative 16% (seasonally adjusted).
  • Thirty-nine percent (seasonally adjusted) of owners reported job openings that were hard to fill, down one point from December and the lowest reading since January 2021.
  • The net percentage of owners raising average selling prices was 22% (seasonally adjusted), a decline of three points from December.

As reported in the SBET report, owners’ plans to fill open positions softened with a seasonally adjusted net of 14% planning to create new jobs in the next three months, down two points from December.

The net percentage of owners reporting inventory gains increased by two points to 0%. Not seasonally adjusted, 13% reported stock increases (up one point), and 19% reported reductions (up four points). A net negative 4% of owners viewed current inventory stocks as “too low” in January, up one point from December. By industry, shortages are reported most frequently in wholesale (18%), retail (12%), and finance (11%).

Price hikes were the most frequent in wholesale (47% higher, 7% lower), retail (43% higher, 11% lower), services (43% higher, 6% lower), finance (42% higher, 14% lower), and construction (36% higher, 9% lower) sectors.

The NFIB Research Center has collected Small Business Economic Trends data with quarterly surveys since the fourth quarter of 1973 and monthly surveys since 1986. Survey respondents are randomly drawn from NFIB’s membership. The report is released on the second Tuesday of each month. This survey was conducted in January 2024.

The full Small Business Economic Trends report and the NFIB Jobs Report are available for further analysis.

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