NASHVILLE – Small business optimism has hit its lowest point since March 2021, with various issues making that the case. But one issue seems to be the chief concern: There’s no one to fill their open positions.
According to a survey from the National Federation of Independent Business, which bills itself as the voice of small business, small business optimism increased a modest 1.6 points in June but is below average for the 18th consecutive month.
Here are some key findings:
- 42% of owners reported job openings that were hard to fill, down two points from May but remaining historically very high.
- 59% of owners reported hiring or trying to hire in June, down four points from May. Of those hiring or trying to hire, 92% reported few or no qualified applicants for the positions they were trying to fill.
- 24% said that labor quality was their top business problem.
- Owners’ plans to fill open positions remain elevated, with a seasonally adjusted net 15% planning to create new jobs in the next three months.
- The difficulty in filling open positions is particularly acute in the manufacturing, construction, and transportation sectors.
“Halfway through the year, small business owners remain very pessimistic about future business conditions and their sales prospects,” said NFIB chief economist Bill Dunkelberg. “Inflation and labor shortages continue to be great challenges for small businesses. Owners are still raising selling prices at an inflationary level to try to pass on higher inventory, labor, and energy costs.”
As Dunkelberg said, another big concern is inflation.
The net percent of owners raising average selling prices decreased three points to a net 29% seasonally adjusted, still a very inflationary level but trending down, the NFIB said. The sector to report the most price increases was retail, with 52% saying they raised prices in June, while just 10% reported that they had lowered.
Regarding compensation and earnings, 36% reported that they raised pay for the month, down 5 points from May. 8% cited labor costs as their top business problem.
In summary, the NFIB wrote:
“Overall, the number of firms reporting employment gains has been falling gradually. The government keeps reporting large employment gains, but it is not clear where they find them. Apparently not on Main Street, according to small business owners. Capital spending and inventory investment are down. Overall, economic growth is falling. This will help put a damper on inflation, but at the cost of lower employment.”