The National Federation of Independent Business’ (NFIB) latest Small Business Optimism Index is out and the news remains good – at least from the feelings of small business owners. The Index measurement fell by 2.3 points in January but remained above the 51-year average of 98 at 102.8. The Uncertainty Index is up 14 points to 100, the third highest recorded reading, after two consecutive months of drop.
“Overall, small business owners remain optimistic regarding future business conditions, but uncertainty is on the rise,” said NFIB Chief Economist Bill Dunkelberg. “Hiring challenges continue to frustrate Main Street owners as they struggle to find qualified workers to fill their many open positions. Meanwhile, fewer plan capital investments as they prepare for the months ahead.”
Only 18 percent of owners reported inflation as their top problem in operating their business, down two points from December. Labor quality also scored at 18 percent, matching inflation as the top single issue. Employment remains a tricky issue for small business owners. The monthly jobs report from NFIB showed 35 percent of all small business owners reporting they have opening that cannot fill. And, in a bit of math from the NFIB that seems difficult to square, “of the 52% of owners hiring or trying to hire in January,” 90 percent reported few or no qualified applicants.
Digging into the inflation-related metrics in the survey, the results are mixed. More than 20 percent of owners raised average selling prices and 30 percent reported higher average prices. Only 9 percent reported lower selling prices. Certain industries were particularly hard hit in the price hiking department, with nearly half of finance companies (47%), 35% of retail, and 34% of wholesale companies reporting price increases. A net negative 25 percent reported positive profit trends. Of those reporting lower profits, 34 percent blamed weak sales, 17 percent pointed to regular seasonal change, and 10 percent blamed the rise in the cost of materials. More than 60 percent of owners said they were not interested in a loan at this time, possibly good news meaning cash flow is okay for these owners or possibly bad news because expansion is not on the horizon for these companies.
State-specific data isn’t available, but NFIB State Director Hunter Loggins said, “While many of our small business owners are hopeful, rising uncertainty, worker shortages, and higher costs make it hard to operate and serve their communities. These problems are exacerbated by Georgia’s civil justice system, which continues to lead to higher insurance and operating costs because of too many frivolous lawsuits. If the General Assembly wants to help our economy, it must address the worker shortage and stop lawsuit abuse.”
