Inflation and supply chain send small business optimism to 48-year low

0

The NFIB Optimism Index fell 0.1 points in May to 93.1, marking the fifth straight month below the 98-for-48 average. year-long investigation. Expectations for improved trading conditions have deteriorated every month since January.

Twenty-eight percent of owners said inflation was their biggest problem running their business, down four points from April. The net percentage of owners raising average selling prices rose two points to 72% net (seasonally adjusted), returning to the highest reading in the survey’s 48-year history last reached in March and 32 points more than in May 2021.

“Inflation continues to outpace the offset, which has squeezed real incomes across the country,” said NFIB chief economist Bill Dunkelberg. “Small business owners remain very pessimistic about the second half of the year as supply chain disruptions, inflation and labor shortages do not ease.”

State-specific data is not available, but NFIB State Director Rosemary Elebash said labor remains a critical issue for small businesses in Alabama. “Unemployment has fallen to 2.8%, its lowest level in state history, but our small business members say they still can’t find enough people to work. Employers are ready to train people, but they say no one is applying, and since they don’t have enough people to work, they still have to cut hours and limit the services they offer.

Other key findings from the national survey include:

  • Fifty-one percent of owners reported job openings that could not be filled, up four points from April.
  • The net percentage of owners expecting actual sales to be higher fell three points from April to a negative net result of 15%.
  • A net 46% (seasonally adjusted) of owners said they had increased their compensation, down three points from April, and a net 25% planning to increase compensation in the next three months, down two points compared to April, but at a historically high level.
  • Thirty-nine percent of owners say supply chain disruptions have had a significant impact on their business, up three points. Another 31% report a moderate impact and 22% report a slight impact. Only 8% of owners report no impact from recent supply chain disruptions.

As reported in NFIB Monthly Jobs Report, labor markets are tight as 51% (seasonally adjusted) of all homeowners reported job openings they were unable to fill in the current period. Ninety-two percent of those hiring or trying to hire reported few or no qualified candidates for the positions they were trying to fill. Twelve percent of owners cited labor costs as their top business issue. Twenty-three percent said the quality of labor was their biggest business issue, behind inflation.

Unadjusted, 3% of owners reported lower average selling prices and 71% reported higher average selling prices. Price increases were most frequent in wholesale trade (80% up, 4% down), manufacturing (79% up, 1% down), retail trade (78% up, 2% less) and construction (77% more, 2% less). lower).

Advertising. Scroll to continue reading.

Fifty-three percent of owners reported capital spending in the past six months, down one point from April. Among owners who incurred expenses, 36% said they purchased new equipment, 21% acquired vehicles and 15% improved or expanded facilities. Six percent of owners acquired new buildings or land for expansion and 12 percent spent money on new fixtures and furniture. Twenty-five percent of owners expect capital spending over the next few months, down two points from April.

One percent of owners (seasonally adjusted) reported higher nominal sales over the past three months, down two points from April. The net percentage of owners expecting higher actual sales volumes fell three points to a negative net result of 15%.

The net percentage of owners reporting inventory increases fell five points to a negative net result of 1%. Seventeen percent of owners reported increases in inventory while 15 percent reported reductions as strong sales reduced inventory at many businesses. A net 8% of owners viewed current inventory as “too low” in May, up two points from April. A net 1% of owners plan to invest in stocks over the next few months.

The frequency of reporting positive earnings trends was a net negative 24%, down seven points from April. Among owners reporting lower profits, 34% blamed rising cost of materials, 25% blamed lower sales, 10% cited labor costs, 9% cited usual seasonal change , 8% cited lower prices and 3% cited higher taxes. or regulatory costs. For owners reporting higher profits, 49% credited sales volumes, 18% cited higher prices, and 16% cited the usual seasonal change.

Two percent of homeowners said all of their borrowing needs were not met. Twenty-two percent said all of their credit needs were met, and 65 percent said they weren’t interested in a loan. A net 4% said their last loan was harder to get than previous attempts. One percent of owners said financing was their top business issue. A net 14% of homeowners said they paid a higher rate on their most recent loan, down two points from April.

Share.

About Author

Comments are closed.