Small businesses continue to feel the impact of inflation and struggle to find adequate workers to fill vacancies.
According to the National Federation of Independent Business, 33 percent of small business owners cited inflation as their top concern in October. This number is three points higher than reported in September.
The NFIB Small Business Optimism Index fell 0.8% to 91.3 in October, marking 10 consecutive months of staying below the 49-year average of 98.
“Owners continue to show a gloomy view of future sales growth and business conditions, but are still looking to hire new workers,” NFIB Chief Economist Bill Dunkelberg said in a statement.
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“Inflation, supply chain disruptions and labor shortages continue to limit the ability of many small businesses to meet demand for their products and services,” he continued.
Small business owners expecting better business conditions over the next six months fell two points from September to a net negative 46 percent, NFIB data showed. The data also revealed that the net percentage of owners raising average sales prices decreased by one point to a seasonally adjusted net 50%, and that half of all businesses surveyed were raising prices as a result of inflation.
The NFIB’s October jobs report found that 46 percent of landlords reported vacancies that were difficult to fill, the same as reported in September. Among employers looking for workers, 90% report few or no qualified candidates for the positions they want to fill.
Seasonally adjusted, a net negative 8% of all owners reported higher nominal sales over the past three months, down three points from September. The net percentage of owners expecting higher actual sales volumes fell three points to a net negative 13%.
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The net percentage of owners experiencing inventory increases jumped one point to a net negative 1%. A total of 16% of owners report inventory reduction as they cautiously reduce inventory purchases.
Owners were also impacted by the supply chain, with 31% of owners recently saying supply chain disruptions had a significant impact on their business. Another 31% reported a moderate impact, and 27% said their business had a slight impact. Only 10% of owners said they felt no impact from recent supply chain disruptions.
The net percentage of owners raising average sales prices fell one point from September to a seasonally adjusted net 50%. When adjustments are not taken into account, 8% of owners report that their average sales prices are lower, and 56% report higher average sales prices. The biggest price increases are in retail, wholesale, construction and services.
A net 44% of owners reported an increase in compensation when seasonally adjusted, down one point from September. A 32% net plan for compensation increases over the next three months, a nine-point jump from September and the highest since October 2021.
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When asked about their top business problem, 10 percent of owners said labor costs, and 23 percent cited labor quality.
The frequency at which positive earnings trends are reported is a net negative 30%, up one point from September. Among owners reporting lower profits, 34% attributed it to increased material costs, 22% blamed weaker sales, 12% said labor costs, 12% said lower prices, 7% cited the usual seasonal change, and 2% cited higher taxes or regulatory costs. Of the owners reporting higher profits, 47% credited sales volume, 20% cited the usual seasonal change and 16% said higher prices.