Small businesses face increased challenges due to labor quality and inflation, according to the NFIB’s Small Business Optimism Index. The index fell 1.1 points to 89.0 in April, marking the 16th straight month it has been below its 49-year average of 98.
Work quality was cited as the biggest business issue by 24% of respondents, with inflation a close second at 23%. “Optimism is not improving on Main Street as more owners struggle to find qualified workers to fill their vacancies,” said NFIB Chief Economist Bill Dunkelberg. “Inflation remains a major concern for small businesses, but is showing signs of easing.”
The survey also revealed that net negative 23% of business owners reported positive profit trends, a deterioration of five points compared to March. Owners’ plans to fill open positions remain high, with a seasonally adjusted net 17% planning to create new jobs in the next three months. Additionally, a net 40% reported raising compensation, while a net 21% plan to increase compensation further in the next three months.
Inventory management has also proven to be a challenge for businesses. A net negative 5% of owners considered current inventory levels “too low” in April, down six points from March. The most significant shortages were reported in the manufacturing, agricultural, retail and wholesale sectors.
The number of owners who raised average sales prices fell four points to a net 33%, the lowest since March 2021. This may signal a slight easing of inflationary pressures, which have been a persistent concern for small businesses.
On the investment front, 56% of owners reported capital expenditures in the past six months, with 19% planning capital expenditures in the near future. The most common expenditures were for new equipment and vehicles, as well as improvements or expansions to existing facilities.
Not all news was negative, however. Only 2% of owners reported that their loan needs were not met and 59% said they were not interested in a loan. This indicates that access to credit, while not a significant problem for most small businesses, is still a challenge for a small subset.
The NFIB Research Center has tracked small business economic trends with surveys since 1973. The latest findings underscore the continuing challenges small businesses face today, including labor quality, inflation and inventory management. This requires strategic planning and ingenuity from business owners to navigate these difficulties successfully.
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Image: Depositphotos
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