According to the latest NFIB Small Business Optimism Index from the National Federation of Independent Business, inflation has replaced labor quality as the most important problem facing small businesses.
The index found that 23 percent of small business owners identified inflation as their single most important operating problem, up one percentage point from last month. Previously, small business owners had placed labor quality as their most important problem with 40 percent of owners reporting they had job openings they could not fill.
“Small business owners remain very pessimistic about economic prospects this year,” said NFIB Chief Economist Bill Dunkelberg. “Inflation and labor quality have consistently been a tough complication for small business owners, and they are not convinced that it will get better in 2024.”
The report found that more small business owners expect business conditions to improve over the next six months, but the number is still at a net negative 36 percent – 25 percentage points better than last June’s reading of a new negative 61 percent, NFIB said.
The report found that a seasonally adjusted net 16 percent of small business owners plan to create new jobs in the next three months. As long as consumer spending holds up, the report found, small businesses will continue to need more workers. A net 29 percent of owners plan to raise compensation in the next three months, down one point from November. Still, the net percentage of owners who plan to raise their average selling prices was unchanged, the report found.
Fewer owners anticipate making capital outlays in the next six month, the report found, with only 58 percent saying they would, down three points from November. Those making capital outlays will be purchasing new equipment (40 percent), vehicles (22 percent) and expanded or improved facilities (19 percent). Only 11 percent will be purchasing new fixtures and furniture, and only 5 percent will be purchasing new buildings or land for expansion.