Small Business Economy is Still Troubled by Inflation & Labor Shortages

Date: March 15, 2023

Struggles to fill job openings continue through February

NFIB’s monthly Jobs report shows that small businesses continued to struggle to increase their workforce in February, with 47% reporting job openings that they’ve had trouble filling. Meanwhile, the monthly Small Business Economic Trends (SBET) report saw the NFIB Small Business Optimism Index increase 0.6 points to 90.9, still below the 49-year historical average of 98.  

NFIB’s February 2023 Jobs Report noted that reports of labor costs as the top business problem are near 48-year record high levels, only one point below the December 2021 record of 13%. Twenty-one percent of small business owners also cited labor quality as their top business problem, three points down from January. The number planning to create new jobs in the next three months dropped 2 points from January to a net 17%, far below the record-high reading of 32% from August 2021. 

“Small business owners remain doubtful that business conditions will get better in the coming months,” said NFIB Chief Economist Bill Dunkelberg. “They continue to struggle with historic inflation and labor shortages that are holding back growth. Despite their economic challenges, owners are working hard to create new jobs to strengthen the economy and their firms.” 

The February 2023 Small Business Economic Trends report noted that 28% of small business owners reported that inflation was their single most important problem, a two-point increase since January and the most commonly-reported top problem. Negative 9% of small business owners expect sales to improve in the near future, a five-point increase from January.  

Down two points from last month, a net negative 47% of small business owners expect better business conditions in the near future. Sixty percent say that they are hiring or trying to hire in February, but 90% of those owners also said that there were few or no qualified applicants for the positions they were trying to fill. 

Employers continue to raise compensation to entice new employees, although at a lower rate than last month. A net 38% of small owners reported raising compensation, down four points from January’s reading.  

Sixty percent of small business owners reported capital outlays in the recent past, with the most common purchase being new equipment, followed by new vehicles, new fixtures and furniture, and improved or expanded facilities. An additional 21% plan capital outlays in the next few months. 

Read the complete February 2022 Jobs Report here. The complete Small Business Economic Trends report can be read here.  

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