WASHINGTON — Small-business owners believe that inflation is their single most important problem, according to the latest findings of the National Federation of Independent Business (NFIB) Research Center. The organization’s Small Business Optimism Index decreased slightly in January to 97.1, down 1.8 points from the previous month.
The survey found that 22% of owners listed inflation as their biggest concern. According to the U.S. Bureau of Labor Statistics, the inflation rate in the U.S. rose 7.5% in the year between January 2021 and January 2022 — the highest increase since 1982. The NFIB study found net percent of owners raising average selling prices increased four points to a seasonally adjusted 61%. This is the highest reading since the fourth quarter of 1974.
“More small-business owners started the New Year raising prices in an attempt to pass on higher inventory, supplies and labor costs,” said NFIB Chief Economist Bill Dunkelberg. “In addition to inflation issues, owners are also raising compensation at record high rates to attract qualified employees to their open positions.”
The NFIB has found that rising compensation rates are also setting records. In its January monthly jobs report, the organization learned that a net 50% (seasonally adjusted) of small businesses reported raising compensation, a 48-year record high reading. A net 27% plan to raise compensation in the next three months. The NFIB also found that 11% of owners cited labor costs as their top business problem, and 23% said that labor quality was their top business problem.
Many owners, however, are still looking to build their employee base and fill open positions, with a seasonally adjusted net 26% planning to create new jobs in the next three months. This number is down two points from December and just six points below the highest reading in the 48-year history of the survey set in August 2021. Forty-seven percent of owners reported job openings that could not be filled, a decrease of two points from December.
While many participating in the survey still remain pessimistic about future economic conditions — with a net 33% expecting things to worsen in the next six months — the NFIB reports that this is slightly better than the previous month’s 35%.
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