WASHINGTON — A survey recently released by the National Federation of Independent Business (NFIB) found that, in July 2022, 37% of small-business owners reported that inflation was their single most important problem in operating their business. This is an increase of three points from June and the highest level since the fourth quarter of 1979.
The NFIB also reported that its Small Business Optimism Index rose 0.4 points in July to 89.9. The advocacy group notes, however, that it was the sixth consecutive month that the index fell below the 48-year average of 98.
“The uncertainty in the small business sector is climbing again as owners continue to manage historic inflation, labor shortages, and supply chain disruptions,” says NFIB Chief Economist Bill Dunkelberg. “As we move into the second half of 2022, owners will continue to manage their businesses into a very uncertain future.”
Other key findings of the report include:
- Owners who are expecting better business conditions over the next six months increased nine points from June’s record low level to a net-negative 52%. Expectations for better business conditions have deteriorated every month from January to June of this year.
- Forty-nine percent of owners reported job openings they could not fill in the current period, down one point from June but historically very high.
- Seasonally adjusted, a net 37% plan price hikes, down 12 points.
- The net percent of owners raising average selling prices decreased seven points to a net 56% (seasonally adjusted). The decline is significant but the net percent still raising prices is inflationary.
- The net percent of owners who expect real sales to be higher decreased one point from June to a net negative 29%.
- The Uncertainty Index increased 12 points from last month to 67.
To help with efforts of keeping employees in their current positions, a net 48% reported raising compensation, and a net 25% plan to raise compensation in the next three months. The study also found that 9% of owners cited labor costs as their top business problem and 21% said that labor quality was their top business problem, remaining in second place behind inflation.
Supply chain problems were still causing headaches for many small-business owners, with 32% saying these issues have had a significant impact on their business. Another 36% report a moderate impact and 23% report a mild impact. Only 9% report no impact from recent supply chain disruptions.
Despite these challenges, the report found that expansion is on the minds of many owners, with 51% reporting capital outlays in the last six months. Of those making expenditures, 36% reported spending on new equipment, 21% acquired vehicles, and 14% improved or expanded facilities. The report found that 9% spent money for new fixtures and furniture and 5% acquired new buildings or land for expansion. Looking ahead, 22% of owners plan capital outlays in the next few months.
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