Washington – The small business index of MetLife and the US Chamber of Commerce, published today, found that inflation is the dominant challenge for small business owners.
The index found that 88% of small business owners are concerned about the impact of inflation on their business. Nearly half (49%) are a lot compared to 44% in the last quarter and an increase of 31% in the fourth quarter of 2021.
“Historical inflation is the most important and deeply worrying thing for small businesses right now,” said Tom Sullivan, vice president of the U.S. Chamber of Commerce for Small Business Policy. “But at the same time, there is confidence among small business owners that customer demand will remain strong, and the index for this quarter shows that they want to hire and plan to meet that demand in the coming months.
Despite a sharp rise in inflation concerns and continuing economic uncertainty, the Small Business Index scored 2.7 points to reach a high of the new pandemic era of 66.8. The rise of the index comes from its unique focus on individual circumstances in small business, with less weight given to attitudes towards the wider economy.
For example, two out of three small business owners say their business is in good shape, an increase of five percentage points from the last quarter and equal to the pre-pandemic Q1 2020. Two-thirds (66%) say they expect revenue to increase next year, and 43% plan to hire more staff, the highest number registered in the last two years.
Meanwhile, there has been no improvement in the way small businesses view the economy as a whole. About half (49%) say the US economy is bad, according to the last few quarters. Less than one in three (30%) say the US economy is generally good. Slightly more (37%) rate their local economy as good.
Small business owner Brenda Nolby is still in high demand at her gym in Ham Lake, Minnesota.
“My current class record is strong, which makes me believe that the local economy is doing well. We have waiting lists for classes, so families obviously have enough for discretionary expenses, ”said Nolby, CEO of Jam Hops Gymnastics. “The biggest impact on inflation is the need to increase wages by about 15-20%.”
When asked to rank their main challenges, 44% of small businesses reported inflation (up 33% in the last quarter), while supply chain problems (28%) and revenue (22%) remained stable. The number of small businesses choosing rising interest rates as a major challenge (15%) has doubled since the last quarter. Three-quarters (74%) say they are concerned about the impact of rising interest rates on their business.
“Although we are facing headwinds, it is promising to see small business owners’ optimism peak in the new pandemic era,” said Cynthia Smith, senior vice president, regional business at MetLife. “Small businesses in America employ tens of millions of people and make a major contribution to the national economy. This resilience among small business owners will play a significant role in tackling economic uncertainty. ”
- Small business owners see more competition and bureaucracy. When comparing the current conditions with six months ago, small businesses report higher levels of competition (39% vs. 30% in the last quarter) and say they spend more time on licensing, compliance or other government requirements (37% vs. 29%). last quarter).
- Raising the prices of products or services so most small businesses say they are coping with inflation (69%), followed by borrowing (46%) and shrinking staff (35%).
- 53% of small retailers they say inflation is the biggest challenge, well above other sectors, up 21 percentage points from the last quarter.
- Hiring problems remain. Over half (55%)of small businesses are concerned about filling vacant roles. 54%are concerned about the retention of employees.
- Four out of 10 small business owners they say they still offer employees a hybrid work environment. Of these, 54% plan to continue offering it indefinitely.
- 50% of small business owners say they work more hours now than a year ago. Only 30% said the same last time this question was asked in 2017.
About the small business index
MetLife and the US Chamber of Commerce Small Business Index is part of a long-standing collaboration between MetLife and the US Chamber of Commerce to raise the voice of small business owners in America and highlight the important role they play in the nation’s economy. The quarterly index, an online survey of 750 small business owners and decision makers, is designed to measure the temperature of the sector, see where small business owners are confident and where they are challenged.
Earlier this month, MetLife and the US Chamber of Commerce released a Special report on small business and the inclusion of LGBTQ +. Find more special reports for small businesses here.
About the US Chamber of Commerce
The US Chamber of Commerce is the largest business organization in the world, representing companies of all sizes in every sector of the economy. Our members range from small businesses and local chambers of commerce on America’s main streets to leading industry associations and large corporations.
They all share one thing: they rely on the US House of Representatives to be their voice in Washington, across the country and around the world. For more than 100 years, we have advocated for pro-business policies that help businesses create jobs and grow our economy.
MetLife, Inc. (NYSE: MET), through its subsidiaries and affiliates (MetLife), is one of the world’s leading financial services companies, providing insurance, annuities, employee income and asset management to help its individual and institutional customers to navigate a changing world. Founded in 1868, MetLife has operations in more than 40 markets worldwide and holds leading positions in the United States, Japan, Latin America, Asia, Europe and the Middle East. For more information visit www.metlife.com.