Small businesses still dealing with inflation, labor shortages

Small businesses continue to feel the effects of inflation and struggle to find enough workers to fill job openings.

According to the National Federation of Independent Business, 33% of small business owners cited inflation as their most important problem in October. That number is three points higher than what was reported in September.

The NFIB’s Small Business Optimism Index fell 0.8% to 91.3 in October, marking the 10th straight month it has remained below the 49-year average of 98.

“Employers continue to show a pessimistic view about future sales growth and business conditions, but are still looking to hire new workers,” said NFIB Chief Economist Bill Dunkelberg in a statement.

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Small businesses continue to feel the effects of inflation and struggle to find enough workers to fill job openings. (Getty Images)

“Inflation, supply chain disruptions and labor shortages continue to limit the ability of many small businesses to meet demand for their products and services,” he continued.

Small business owners who expect better business conditions in the next six months dropped two points from September to a net negative of 46%, NFIB data showed. The data also revealed that the net percentage of owners who raised average sales prices decreased one point to a net 50%, adjusted for the season, and that half of all business surveyed raised prices as a result of inflation.

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The NFIB’s October job report found that 46% of employers reported job openings that were difficult to fill, the same as reported in September. Among employers looking for workers, 90% report that there are few or no qualified applicants for the positions they are looking to fill.

Adjusted for the season, a net negative 8% of all owners reported higher nominal sales in the last three months, a decrease of three points from September. The net percentage of owners expecting higher actual sales volume dropped three points to a net negative 13%.

INFLATION TOP ELECTION ISSUE FOR SMALL BUSINESSES LEADING INTO THE MIDTERMS

Now hiring sign

The NFIB’s October job report found that 46% of employers reported job openings that were difficult to fill, the same as reported in September. Among employers looking for workers, 90% report that there are few or no qualified applicants for the positions they are looking for. (AP Images)

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The net percentage of owners who experienced an increase in inventory jumped one point to a net negative 1%. A total of 16% of owners reported inventory reductions as they carefully cut inventory purchases.

Employers are also affected by the supply chain, with 31% of employers saying recently that supply chain disruptions have had a significant impact on their business. Another 31% reported a moderate impact and 27% said their business experienced a slight impact. Only 10% of employers said they felt no impact from recent supply chain disruptions.

The net percentage of owners who increased average sales prices decreased one point from September to a seasonally adjusted net of 50%. When adjustments were not considered, 8% of owners said their average sales price was lower and 56% reported a higher average sales price. The price increase is most common in retail, wholesale, construction and services.

A net 44% of employers reported increasing compensation, when adjusted for the season, up one point from September. A net 32% plan to increase payments over the next three months, a nine-point jump from September and the highest since October 2021.

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A net 44% of employers reported increasing compensation, when adjusted for the season, up one point from September. A net 32% plan to increase payments over the next three months, a nine-point jump from September and the highest since October 2021 (iStock / iStock)

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When asked about their main business problem, 10% percent of owners said labor costs and 23% cited labor quality.

The frequency with which positive profit trends are reported is a net negative of 30%, a point increase from September. Among the owners who reported lower profits, 34% attributed it to increased material costs, 22% blamed weaker sales, 12% said labor costs, 12% said lower prices, 7% cited usual seasonal changes and 2% cited higher taxes or regulations. cost. Of the owners who reported higher profits, 47% gave credit to sales volumes, 20% cited seasonal changes and 16% said higher prices.

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