Small Business Optimism Improves Even As Hiring Crisis Continues

Date: May 20, 2021

For the third month in a row, small businesses have reported higher levels of optimism about the future.

NFIB’s monthly jobs report shows that small businesses continue to recover from the worst of the COVID-19 pandemic, but significant problems remain  most importantly record-high levels of difficulty in finding qualified employees. 

In NFIB’s monthly Small Business Economic Trends (SBET) jobs report, the NFIB Small Business Optimism Index rose for the third month in a row, from 95 points in January to 99.8 in April. Of the ten components that make up the index, eight metrics improved and two metrics declined. 

However, 44% of owners reported that they could not fill open positions, the highest number on record and twice the 48-year average of 22%. Labor quality remains the most pressing issue facing small businesses, with 24% of owners citing it as their biggest problem. 

“Small business owners are seeing a growth in sales but are stunted by not having enough workers,” said NFIB Chief Economist Bill Dunkelberg. “Finding qualified employees remains the biggest challenge for small businesses and is slowing economic growth. Owners are raising compensation, offering bonuses and benefits to attract the right employees.” 

Fifty-one percent of owners report that they have either already raised compensation or plan to do so in the near future to entice new employees. These wage increases translate to higher prices for customers: 36% of owners say they’ve raised prices, a 10-point increase from March and the highest reading in 40 years.  

The amount of owners reporting a positive trend in their earnings has improved 8 percentage points  over the last three months, now sitting at a net negative 7%. The most commonly cited cause of lower profits was weaker sales (39%), with expected seasonal changes as a distant second at 16%. 

The number of owners expecting to make capital expenditures in the next few months jumped from 20% in March to 27% in April. Forty-seven percent reported capital expenditures in the last six months, as well. 

But many owners feel that these gains are easily undone. The percent of owners expecting better business conditions over the next six months fell seven points since March.  

Read the complete Small Business Economic Trends report for April 2021 here, and see this new release summarizing its key findings.   

Take ActionIf you lead a small business and would like to share your experience hiring to fill open positions, please complete this brief survey. 

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