Record number of small business owners report labor quality as top business problem.
In November, the National Federal of Independent Business (NFIB) Small Business Optimism Index increased slightly by 0.2 points to 98.4. Four of the 10 Index components improved, four declined, and two were unchanged. The NFIB Uncertainty Index decreased four points to 63.
The Small Business Optimism Index is a composite of ten Small Business Economic Trends (SBET) that provides a monthly, summary data point for the state of the small business economy. The ten indicators include: “good time to expansion, general economic outlook, expected sales, current earnings, planned capital outlays, current job openings, hiring plans, inventory status, expected inventory change, and expected credit conditions.”
“As the end of the year nears, the outlook for business conditions is not encouraging to small business owners as lawmakers propose additional mandates and tax increases,” said NFIB Chief Economist Bill Dunkelberg. “Owners are also pessimistic as many continue managing challenges like rampant inflation and supply chain disruptions that are impacting their businesses right now.”
State-specific data is not available, but NFIB State Director Dawn McVea said, “Our small business members had hoped all this would be behind them by now, but it’s clear that issues such as the supply chain and labor will continue to be a challenge in the coming year.”
Small business owners continue to struggle to increase their workforce with 10% of owners cited labor costs as their top business problem and 29% said that labor quality was their top business problem, a 48-year record high according to. NFIB’s monthly jobs report.
“Unfortunately, the tight labor market has not eased for small business owners,” said NFIB Chief Economist Bill Dunkelberg. “Unfilled positions and labor quality remain the biggest challenges for small business owners as they work to get back to pre-crisis levels. Owners have been increasing compensation to record-high levels to attract the right employees to their business.”
Owners expecting better business conditions over the next six months decreased one point to a net negative 38%, tied for the 48-year record low reading. Seasonally adjusted, a net 54% of owners plan price hikes, a 48-year record high reading.
NFIB’s monthly jobs report reported that small business owners continue to struggle to find workers to fill their open positions. 48% (seasonally adjusted) of all small business owners reported job openings they could not fill in the current period and 60% of owners reported hiring or attempting to hire in November.
35% of owners reported that supply chain disruptions had a significant impact on their business, with only 9% of owners report no impact from recent supply chain disruptions.
You can read the full report below.