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Study: Small-business Optimism Dimmed Slightly in March

NFIB finds inflation, labor woes are still listed as top concerns

WASHINGTON — The National Federation of Independent Business (NFIB) Small Business Optimism Index fell 0.8 points in March, 2023, to 90.1, marking the 15th consecutive month that it’s fallen below the 49-year average of 98.

The study found that 24% of small-business owners reported inflation as their single most important business problem, down four points from February. Owners expecting better business conditions over the next six months remain at a net negative 47%.

“Small-business owners are cynical about future economic conditions,” said NFIB Chief Economist Bill Dunkelberg. “Hiring plans fell to their lowest level since May 2020, but strong consumer spending has kept Main Street alive and supported strong labor demand.”

Key findings of the study include:

  • Forty-three percent of owners reported job openings that were hard to fill, down four points from February and remaining historically very high.
  • The net percent of owners raising average selling prices decreased one point to a net 37% seasonally adjusted.
  • The net percent of owners who expect real sales to be higher deteriorated six points from February to a net negative 15%.

In its monthly job report, the NFIB a seasonally adjusted net 15% of owners are planning to create new jobs in the next three months. However, 26% of owners reported few qualified applicants for their open positions and 27% reported none. The study 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. Labor quality remains in second place behind inflation by one point as the top business problem.

The net percent of owners raising average selling prices decreased one point from February to a net 37% seasonally adjusted, the lowest since April 2021. Unadjusted, 11% reported lower average selling prices and 50% reported higher average prices.

Seasonally adjusted, a net 42% reported raising compensation, down six points from February. A net 22% plan to raise compensation in the next three months.

Additionally, 3% reported that financing was their top business problem. A net 26% of owners reported paying a higher rate on their most recent loan, up two points. Rates are rising, but credit is still available.

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. The report is released on the second Tuesday of each month. This survey was conducted in March 2023.

Small-Business Owners Rank Inflation as Top Problem

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