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NFIB Study: Fewer Small Businesses are Raising Prices

Inflation and labor quality remain top small-business concerns

WASHINGTON — The Small Business Optimism Index, generated by the National Federation of Independent Business (NFIB), increased 1.6 points in June to 91.0, however, it is the 18th consecutive month below the 49-year average of 98. 

Inflation and labor quality are tied as the top small-business concerns, with 24% of owners reporting each as their single most important problem. The net percent of owners raising average selling prices decreased three points to a net 29% seasonally adjusted. The NFIB states that, while this is still an inflationary level, it is trending down. This is the lowest reading since March 2021.

“Halfway through the year, small-business owners remain very pessimistic about future business conditions and their sales prospects,” says 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.”

Key findings from the study include:

  • Small-business owners expecting better business conditions over the next six months improved 10 points from May to a net negative 40%, 21 percentage points better than last June’s reading of a net negative 61%.
  • Forty-two percent of owners reported job openings that were hard to fill, down two points from May but remaining historically very high.
  • The net percent of owners who expect real sales to be higher improved seven points from May to a net negative 14%.

The NFIB also found that 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.

A net negative 10% of all owners (seasonally adjusted) reported higher nominal sales in the past three months, down two points from May. The net percent of owners expecting higher real sales volumes improved seven points to a net negative 14%. A very negative outlook for the second half.

Seasonally adjusted, a net 36% of owners reported raising compensation, down five points from May. A net 22% plan to raise compensation in the next three months. Eight percent cited labor costs as their top business problem, down two points from May, and 24% said that labor quality was their top business problem.

The net percent of owners raising average selling prices decreased three points from May to a net 29% seasonally adjusted, the lowest since March 2021. Unadjusted, 12% of owners reported lower average selling prices and 43% reported higher average prices. Price hikes were the most frequent in retail (52% higher, 10% lower), construction (49% higher, 4% lower), finance (48% higher, 3% lower), and wholesale (47% higher, 19% lower). Seasonally adjusted, a net 31% of owners plan price hikes.

The NFIB Research Center has collected Small Business Economic Trends data with quarterly surveys since the fourth quarter of 1973 and monthly surveys since 1986. Survey respondents are randomly drawn from NFIB’s membership.

Fewer Small Businesses are Raising Prices

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