Inflation a growing concern for small businesses, national survey shows

Small businesses are gloomy about their future, with an index of future expectations plunging to a 48-year record low. The top concerns: Inflation and worker shortages.

The National Federation of Independent Business optimism index stood at 93.2 in April. The net share of owners expecting better business conditions in the next six months eased one point to a record low. Five of the 10 components that make up the small-business sentiment gauge fell, as fewer owners said now was a good time to expand and fewer plan to boost inventories.

About 32% of respondents said inflation is still their biggest operating challenge, up slightly from March and the highest since the fourth quarter of 1980. That share has risen in six of the last seven months, NFIB data show. Monthly surveys began in 1986.

According to the NFIB survey, more owners expected business conditions to worsen over the next six months. Still, the share of owners raising average selling prices eased slightly from March’s record high.

Labor quality was the second-biggest problem and planned compensation changes are still elevated.

“Small business owners are struggling to deal with inflation pressures,” said Bill Dunkelberg, NFIB chief economist, in a statement. “The labor supply is not responding strongly to small businesses’ high wage offers and the impact of inflation has significantly disrupted business operations.”

Small businesses – nationally and locally — have had difficulty filling vacancies and don’t always have the same resources as large firms to attract new talent. While large businesses posted solid hiring gains in April, those with less than 50 employees saw a 120,000 drop in payrolls, the worst in two years, ADP Research Institute data showed last week.


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