Small business optimism fell below its 52-year historical average last month as owners cited inflation and difficulty finding qualified workers, the National Federation of Independent Business said Tuesday. The NFIB’s uncertainty index rose 1 point to 90, leaving it 22 points above its historical average.
Only 7% of owners said it was a good time to expand, 5 percentage points fewer than in August. “Small business owners are proceeding with caution as they interpret how rising costs, interest rates and the difficulty in finding qualified employees are impacting their businesses,” NFIB Chief Economist Bill Dunkelberg said.
Small Business Optimism Meets Hiring Strains
Labor quality and availability topped the list of problems for 26% of small business owners, up 3 percentage points from August, the NFIB said. Nearly one out of every three businesses, or 32%, could not fill job openings. That share was 8 percentage points above the historical average.
Among the 51% of small businesses trying to hire, 87% reported few or no qualified applicants, according to the federation. One services-business owner in Maine told the NFIB: “Our business could increase if we were able to hire skilled labor.”
The Maine owner connected staffing limits to the company’s ability to increase its business. The survey results also distinguish firms trying to hire from the applicants they say they can find: 51% were trying to hire, and 87% of that group reported few or no qualified applicants.
Inflation Remains a Leading Concern
One out of every five small businesses named inflation as its top problem, an increase of 4 percentage points compared with August, the NFIB said. A Georgia retailer described fuel costs for delivery trucks and freight as a pressure on the business. The retailer also said those costs reduce customers’ disposable income for purchases at the store.
The source reported that diesel fuel had risen about 72% during the past year to $6.28 per gallon, citing AAA. It also cited Commerce Department data showing the personal consumption expenditures price index rose 0.3% in August from July and 3.4% year over year. The IMF projected U.S. consumer prices would rise 3.6% this year, above the Federal Reserve’s 2% inflation target.
Small business optimism is one measure in the NFIB survey, alongside labor and inflation concerns reported by owners. The figures give readers a snapshot of challenges reported by small firms, while separate coverage has examined how owners plan for company transitions and how seasonal demand affects shops. For related reporting, see small-business succession planning and seasonal sales at local shops.
Small firms account for 44% of U.S. gross domestic product growth, the source said, and can reflect pressures affecting the broader economy. The NFIB’s survey places current uncertainty 22 points above its historical average, even as fewer owners called expansion a good idea. Another report on small businesses in San Antonio offers a separate view of firms and jobs in one city.
IMF Chief Economist Silvana Tenreyro said Tuesday that inflation is expected to pick up this year and next year. She said central banks should maintain a sufficiently restrictive stance to keep inflation returning to target.
Read the NFIB survey findings from CFO Dive for the source report.