Small business optimism continues to fall as inflation leads to record-high price increases
For the fifth consecutive month, the NFIB Optimism Index has been below the 48-year average. The Small Business Economic Trends (SBET) report showed that in May, the index declined slightly, falling 0.1 points to 93.1. Five of the ten Index components improved while four declined.
The percent of owners expecting better business conditions in the next six months has dropped to a net negative 54% – a record low reading. A net negative 15% of owners expect real sales to be higher, a three-point decrease from April.
“Inflation continues to outpace compensation which has reduced real incomes across the nation,” said NFIB Chief Economist Bill Dunkelberg. “Small business owners remain very pessimistic about the second half of the year as supply chain disruptions, inflation, and the labor shortage are not easing.”
Twenty-eight percent of owners report that inflation is the single most important problem facing their small business, a 4-point decrease from April. In response to the inflation crisis, owners have been increasing selling prices; a net 72% of owners reported raising prices in May, the highest reading in the survey’s 48-year history and a 32-point increase from May 2021.
Small business owners continue to struggle to find workers to fill open positions. Unfilled job openings for small businesses are at 51%, a four-point increase from April and a tie with the highest percent ever recorded in September 2022.
Sixty-six percent of owners report hiring or trying to hire in May, and of that number, 92% reported that they received few or no qualified applicants for the position. This is a 6% increase from April. This labor shortage continues to worsen with few signs of slowing, and is one of the biggest issues facing owners.
Seventy percent of owners report that supply chain disruptions have had a “significant” or “moderate” impact on their business. You can read the full SBET report here, or see a press release summarizing its findings here.
The small business economy continues to ring alarm bells as economic metrics continue to worsen, some dropping to record-low territories. Now is the time to tell Congress to vote no on tax increases and new mandates and instead address the major problems facing Main Street.