WASHINGTON — The Small Business Optimism Index, generated by the National Federation of Independent Business (NFIB) increased 0.6 points in February to 90.9 but remained below the 49-year average of 98, the organization reported. In its study, 28% of owners reported inflation as their single most important business problem, up two points from January. Owners expecting better business conditions over the next six months deteriorated two points from January to a net negative 47%.
“Small-business owners remain doubtful that business conditions will get better in the coming months,” said NFIB Chief Economist Bill Dunkelberg. “They continue to struggle with historic inflation and labor shortages that are holding back growth. Despite their economic challenges, owners are working hard to create new jobs to strengthen the economy and their firms.”
Key findings of the report included:
- Forty-seven percent of owners reported job openings that were hard to fill, remaining historically very high.
- The net percent of owners raising average selling prices decreased four points to a net 38% (seasonally adjusted).
- The net percent of owners who expect real sales to be higher improved five points from January to a net negative 9%.
NFIB research showed that 60% of owners reported hiring or trying to hire in February. Of those hiring or trying to hire, 90% of owners reported few or no qualified applicants for their open positions.
The report also found that 60% of owners reported capital outlays in the last six months. Of those making expenditures, 40% reported spending on new equipment, 26% acquired vehicles, and 12% spent money for new fixtures and furniture. In addition, 18% of owners improved or expanded facilities and 6% acquired new buildings or land for expansion. Capital outlays in the next few months were in the plans of 21% of those surveyed.
Twenty percent of owners recently reported that supply chain disruptions still have a significant impact on their business. Another 33% reported a moderate impact and 34% reported a mild impact. Labor supply problems are widespread.
The net percent of owners raising average selling prices decreased four points from January to a net 38% (seasonally adjusted), the lowest since April 2021. Unadjusted, 12% of owners reported lower average selling prices and 50% reported higher average selling prices.
Seasonally adjusted, a net 46% of owners reported raising compensation. A net 23% plan to raise compensation in the next three months. Twelve percent of owners cited labor costs as 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 February 2023.
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