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Survey: Inflation Pressure Eases, but Remains Top Business Problem

NFIB study finds optimism among owners is low, but is improving

WASHINGTON — A recent survey conducted by the National Federation of Independent Business (NFIB) found that inflation remains the top business problem for small-business owners, with 32% of owners reporting it as their single most important problem in operating their business. This is five points lower than July’s highest reading since the fourth quarter of 1979. The NFIB’s Small Business Optimism Index rose 0.6 points in November to 91.9.

November’s reading, the NFIB notes, is the 11th consecutive month below the 49-year average of 98.

“Going into the holiday season, small business owners are seeing a slight ease in inflation pressures, but prices remain high,” says NFIB Chief Economist Bill Dunkelberg. “The small business economy is recovering as owners manage an ongoing labor shortage, supply chain disruptions, and historic inflation.”

Key findings of the survey include:

  • Owners expecting better business conditions over the next six months improved three points from October to a net negative 43%.
  • Forty-four percent of owners reported job openings that were hard to fill, down two points from October, but historically high and not typical of a recession period.
  • The net percent of owners raising average selling prices increased one point to a net 51% seasonally adjusted, a high reading but lower than earlier this year.
  • The net percent of owners who expect real sales to be higher improved five points from October to a net negative 8%, a weak economic reading.

The NFIB’s monthly jobs report also found that 44% of all owners reported job openings they could not fill in the current period. The difficulty in filling open positions is particularly acute in the transportation, wholesale, and construction sectors. Owners’ plans to fill open positions remain elevated, with a net 18% (seasonally adjusted) planning to create new jobs in the next three months.

Fifty-five percent of owners reported capital outlays in the last six months, up one point from October. Of those making expenditures, 39% of owners reported spending on new equipment, 19% acquired vehicles, and 12% improved or expanded facilities. Eleven percent spent money for new fixtures and furniture and 5% acquired new buildings or land for expansion. Up one point from October, 24% plan capital outlays in the next few months. Overall, capital spending remains too weak to improve productivity.

A net negative 7% of all owners (seasonally adjusted) reported higher nominal sales in the past three months. The net percent of owners expecting higher real sales volumes improved five points to a net negative 8%, a weak reading.

Twenty-nine percent of owners recently reported that supply chain disruptions have had a significant impact on their business. Another 34% report a moderate impact and 26% report a mild impact. Only 11% report no impact from recent supply chain disruptions.

The net percent of owners raising average selling prices increased one point from October to a net 51% seasonally adjusted. Unadjusted, 8% of owners reported lower average selling prices and 56% reported higher average prices. Price hikes were the most frequent in wholesale (73% higher, 0% lower), retail (69% higher, 7% lower), construction (66% higher, 5% lower), and manufacturing (63% higher, 5% lower). Seasonally adjusted, a net 34% plan price hikes.

Seasonally adjusted, a net 40% reported raising compensation, down four points from October. A net 28% of owners plan to raise compensation in the next three months, down four points from October’s reading. Nine percent of owners cited labor costs at their top business problem and 21% 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 4th quarter of 1973 and monthly surveys since 1986. Survey respondents are randomly drawn from NFIB’s membership. The information from this survey was conducted in November 2022.





Survey: Inflation Pressure Eases, but Remains Top Business Problem

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