NFIB’s September Small Business Economic Trends (SBET) report found that inflation remains the top problem facing small business owners, with 30% reporting that inflation is their single biggest problem. A net negative 44% of owners said they expected better business conditions over the next six months, a two-point drop from August.
“Inflation and worker shortages continue to be the hardest challenges facing small business owners,” said NFIB Chief Economist Bill Dunkelberg. “Even with these challenges, owners are still seeking opportunities to grow their business in the current period.”
Meanwhile, NFIB’s September Jobs report found that 22% of small business owners name labor quality as their top business problem, historically elevated but a four-point decrease from August. This makes labor quality the second-most challenging issue facing owners. Ten percent of owners cite labor costs as their top business problem, unchanged from August.
The NFIB Small Business Optimism Index rose 0.3 points in September to 92.1. This is the ninth consecutive month below the 48-year average reading of 98. The Uncertainty Index declined two points to 72.
The percent of small business owners who reported job openings that they could not fill in September decreased three points to 46%, double the historical average of 23%. The Jobs report showed that 42% of owners have open positions for skilled while 22% have openings for unskilled workers.
Sixty-four percent of small business owners reported hiring or trying to hire in September, a one-point decrease from August. Of those owners, 89% reported few or no qualified applicants for the positions they were trying to fill. Up two points from August is the elevated number of owners (a net 23%) who plan to create new jobs in the next three months.
The net percent of small business owners raising average selling prices decreased two points to a net 51%. In addition, a net 31% of owners intend to raise their prices in the near future. A net 45% of owners report raising employee compensation, a one-point decrease from August and five points below the 48-year record high set in January. Another 23% report that they intend to raise compensation in the next three months, a three-point decrease when compared to August. As labor costs rise, so do prices, passing the cost of compensation increases onto consumers.
The net percent of owners who expect real sales to be higher in the next three months increased nine points from August to a net negative 10%. In addition, a net negative 5% of owners reported higher nominal sales in the last three months, a three-point increase from August.
Earlier this year, NFIB advocates successfully urged the U.S. Senate to remove a new 3.8% small business tax from the Inflation Reduction Act and ensure the House did not add it back in. However, NFIB anticipates the 3.8% tax resurfacing in future legislation. Let your Member of Congress know that now is not the time to pass new taxes on small business.