Small business optimism rises but so does uncertainty as a historically high level of unfilled jobs challenge small business recovery
NFIB’s monthly Small Business Economic Trend (SBET) report found labor shortages remain the most prominent challenge facing small businesses trying to recover from the COVID-19 pandemic and government-mandated shutdowns. Twenty-six percent of owners cited labor quality as their top concern, making it the most commonly-cited concern for the sixth consecutive month. For labor-intensive industries that are reopening, such as restaurants and gyms, the vacant positions are slowing small businesses recovery.
“Small businesses optimism is rising as the economy opens up, yet a record number of employers continue to report that there are few or no qualified applicants for open positions,” said NFIB Chief Economist Bill Dunkelberg.
The report showed a 2.9-point increase in small business owners’ optimism, bringing the monthly Optimism Index to 102.5. June was the first time NFIB’s Optimism Index rose above 100 since November 2020. Seven of 10 Index components increased while the other three dropped. However, the NFIB Uncertainty Index also rose by four points to 83.
As a result of the labor shortage, near-record-high numbers of owners (46%) have reported job openings that they could not fill. The record-setting number was 48% in May, but despite this slight decline, the number of owners with unfilled positions is still more than double the 48-year-historical average of 22%.
Another key stat is the number of owners who have raised their average selling price in recent months, which has increased by seven points to a net 47%. This is the highest reading in forty years.
There was good news and bad news regarding expectations for the future. While the percent of owners expecting better business conditions over the next six months rose 14 points but is still in very negative territory.
Similarly, while small business earnings have increased six points since last month, but they remain at a net negative 5% meaning earnings are 5 points lower than they were three months ago.
However, sales have improved by a net 9%, up two points from May. Two historically-high ratings were recorded in regards to inventories: a net 11% of owners viewed current inventory stocks as “too low”, up three points from May, and a net 11% of owners also plan to invest in increased inventory in the next several months.
The small business labor shortage remains a pressing issue. Small businesses are finding themselves unable to hire enough workers to operate at full capacity. Matching the nation’s 9.5 million “unemployed” workers together with these job openings would certainly help economic growth. You can read the full SBET report here.
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