WASHINGTON — The Small Business Optimism Index, generated by the National Federation of Independent Business (NFIB), increased 0.9 of a point in July to 91.9, marking the 19th consecutive month below the 49-year average of 98.
Labor issues were the top concern for small-business owners, the study found, with 42% reporting having job openings that were hard to fill. Twenty-one percent of owners reported that inflation was their single most important problem in operating their business, which is down three points from June.
“With small-business owners’ views about future sales growth and business conditions dismal, owners want to hire and make money now from solid consumer spending,” says NFIB Chief Economist Bill Dunkelberg. “Inflation has eased slightly on Main Street, but difficulty hiring remains a top business concern.”
Key findings of the July study include:
- Owners expecting better business conditions over the next six months improved 10 points from June to a net negative 30%, 31 percentage points better than last June’s reading of a net negative 61%. This is the highest reading since August 2021, but historically very negative.
- Forty-two percent of owners reported job openings that were hard to fill, unchanged from June but remaining historically very high.
- The net percent of owners raising average selling prices decreased four points to a net 25% seasonally adjusted, still a very inflationary level but trending down. This is the lowest reading since January 2021.
- The net percent of owners who expect real sales to be higher improved two points from June to a net negative 12%, a very pessimistic perspective.
The NFIB also found that 61% of owners reported hiring or trying to hire in July, up two points from June. Of those hiring or trying to hire, 92% of owners reported few or no qualified applicants for the positions they were trying to fill. Thirty-three percent of owners reported few qualified applicants for their open positions and 23% reported none.
A net negative 13% of all owners (seasonally adjusted) reported higher nominal sales in the past three months, down three points from June and the lowest reading since August 2020. The net percent of owners expecting higher real sales volumes improved two points to a net negative 12%.
Falling four points from June, the net percent of owners raising average selling prices dropped to a net 25% (seasonally adjusted), the lowest since January 2021. Twenty-one percent of owners reported that inflation was their single most important problem in operating their business.
Seasonally adjusted, a net 38% reported raising compensation. A net 21% plan to raise compensation in the next three months, down one point from June. Ten percent of owners cited labor costs as their top business problem, up two points. Twenty-three percent of owners said that labor quality was their top business problem.
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. This survey was conducted in July 2023.
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