Optimism ticks up but remains below historical average
NFIB’s monthly Small Business Economic Trends (SBET) report found that inflation remains the top problem for small business owners, with 32% of owners reporting it as their single most important problem. This is a five-point decrease from the 43-year record-high reading in July 2022.
The November report also shows the number of small business owners expecting better business conditions over the next six months improved three points from October to a net negative 43%, a recession reading. The monthly Small Business Optimism Index rose 0.6 points in November to 91.9, the 11th consecutive month below the 49-year average of 98.
“Going into the holiday season, small business owners are seeing a slight ease in inflation pressures, but prices remain high,” said NFIB Chief Economist Bill Dunkelberg. “The small business economy is recovering as owners manage an ongoing labor shortage, supply chain disruptions, and historic inflation.”
The percent of owners raising prices increased to 56%, historically high but a significant decrease from earlier this year. Eight percent of owners report lowering prices, and the remaining 36% have left prices the same. In addition, a net 34% of owners intend to hike their prices soon.
A net negative 8% of owners expect real sales to increase, a weak reading. This is a 5-point increase from October and a 21-point increase from the year’s low in July. A net negative 7% of all owners reported higher sales in the recent past, up one point from October.
Seasonally adjusted, a net 40% reported raising compensation, down four points from October. A net 28% of owners plan to raise compensation in the next three months, also down four points from October’s reading. Nine percent of owners cited labor costs as their top business problem and 21% said that labor quality was their top business problem.
Fifty-five percent of owners reported capital outlays in the last six months, with another 24% planning to make outlays in the next few months. The most common expenditure was in new equipment, followed by vehicles, and improving or expanding facilities. Overall, capital spending remains too weak to improve productivity.
A net 40% of owners report raising compensation, down four points from October, while a net 28% of owners plan to raise compensation soon, also down four points from October. Both figures are historically very high.
To learn more about the Small Business Economic Trends report for October 2022 you can read the full report here, and see this news release summarizing its key findings.
