Small Business Optimism Dips in July as Labor Shortage Remains Biggest Challenge

Date: August 11, 2021

Unfilled job openings hit a 48-year record high

LANSING, MI (Aug. 11, 2021) – The NFIB Small Business Optimism Index decreased in July to 99.7, a decrease of 2.8 points, reversing June’s 2.9-point gain. Six of the 10 components declined, three improved, and one was unchanged. The NFIB Uncertainty Index decreased seven points to 76, indicating owners’ views are held with more certainty than in earlier months.

“Small business owners are losing confidence in the strength of the economy and expect a slowdown in job creation,” said NFIB Chief Economist Bill Dunkelberg. “As owners look for qualified workers, they are also reporting that supply chain disruptions are having an impact on their businesses. Ultimately, owners could sell more if they could acquire more supplies and inventories from their supply chains.”

Other key findings include

  • Sales expectations over the next three months decreased 11 points to a net negative 4% of owners.
  • Owners expecting better business conditions over the next six months decreased eight points to a net negative 20%.
  • Earnings trends over the past three months decreased eight points to a net negative 13%.

As reported in NFIB’s monthly jobs report, 49% of owners reported job openings that could not be filled, a 48-year record high. Owners’ plans to fill open positions remain at record high levels, with a seasonally adjusted net 27% planning to create new jobs in the next three months, down one point from June’s record high reading.

A brief survey of NFIB members in Michigan showed that the job shortage in the state to be far and above the national average. A startling 95% of respondents had open positions, and of those, 96% were unable to find qualified workers.  “Small business owners continue to struggle to find qualified applicants for open positions, despite offering increased wages, benefits, and other employment incentives,” said NFIB Michigan Assistant State Director Amanda Fisher. 

According to the June data from the Bureau of Labor and Statistics, Michigan is struggling to get back to pre-pandemic levels, ranking 43rd in job growth out of all 50 states.  “Let’s not forget, it has been less than two months since businesses in Michigan have been able to be open at full capacity.  Between the federal government’s supplemental unemployment benefits and the state government’s ability to restrict business operations through epidemic orders, small business recovery in Michigan continues to be hampered by government actions more than any other factors,” said Fisher.

Click here to view the full report.

 

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Related Content: Small Business News | Economy | Michigan

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