While inflation continues to drive up costs, small business owners report their main challenge is in hiring.
In the April 2023 National Federation of Independent Business (NFIB) Small Business Optimism Index report, which gauges the concerns of business owners across America, the index decreased by 1.1 points, making the 16th consecutive month below the 49-year average of 98. The report cites labor quality as the top business problem throughout the nation, replacing inflation by one point.
NFIB State Director Dawn McVea said while inflation is still driving up the cost of doing business, labor remains an immediate concern for small business owners.
“Without enough qualified job applicants, Main Street businesses can’t provide the level of service customers expect, while inflation continues to affect prices across the board,” McVea said.
The NFIB monthly job report showed that U.S. business owners who plan to fill positions remained high. There is a seasonally adjusted net 17% of owners who plan to create new jobs in the next three months and a net 40% who reported raising compensation.
Nine percent cited labor costs as their top business concern.
Overall business optimism is not improving, and U.S. business owners continue to struggle to find qualified employees to fill open positions. Positive profit trends also continue to go downward, showing a net negative 23% in April, five points worse than March.
Owners are also not optimistic about increased sales. From March to April, U.S. business owner optimism regarding sales went down four points to a net negative 19%.
For those who reported issues with profits, 29% blamed sales while 20% blamed the rise in the cost of material, 13% seasonal change, 10% on labor costs, 9% on lower prices and 4% on higher taxes or regulatory costs.
Of those who did show higher profits, 51% credited sales volumes.
“Optimism is not improving on Main Street as more owners struggle with finding qualified workers for their open positions,” said NFIB Chief Economist Bill Dunkelberg. “Inflation remains a top concern for small businesses but is showing signs of easing.”
The April Consumer Price Index showed that the annual rate of inflation eased to below 5% for the first time in two years.
Sarah Ulmer
