WASHINGTON–– The NFIB Small Business Optimism Index fell 0.2 points in May to 99.6, with the organization noting May saw a slight pause in the recovery of small business optimism after steadily increasing each month in 2021.
As reported in NFIB’s monthly jobs report, a record-high 48% of owners reported unfilled job openings.
“The labor shortage is holding back growth for small businesses across the country,” said NFIB Chief Economist Bill Dunkelberg. “If small business owners could hire more workers to take care of customers, sales would be higher and getting closer to pre-COVID levels. In addition, inflation on Main Street is rampant and small business owners are uncertain about future business conditions.”
Key Findings
Other key findings of the national survey include:
- Five of the 10 Index components improved, three declined, and two were unchanged
- The NFIB Uncertainty Index decreased one point to 79
- Job creation plans over the next three months rose to a net 27%, up six points
- Owners expecting better business conditions over the next six months fell 11 points to a net negative 26%
- Earnings trends over the past three months declined four points to a net negative 11%
Capital Outlays
Fifty-nine percent of owners reported capital outlays in the last six months, up two points from April. Of those making expenditures, 44% reported spending on new equipment, 24% acquired vehicles, and 16% improved or expanded facilities. Six percent acquired new buildings or land for expansion and 13% spent money on new fixtures and furniture. Twenty-seven percent are planning capital outlays in the next few months, the NFIB said.
Additional Findings
According to the NFIB, a net 7% of all owners (seasonally adjusted) reported higher nominal sales in the past three months, up four points from April. The net percent of owners expecting higher real sales volumes improved two points to a net 3%, a “historically weak reading,” the organization stated.
The net percent of owners reporting inventory increases rose one point to a net negative 1%. A net 8% of owners view current inventory stocks as “too low” in May, up one point from April and at historically high levels. A net 6% of owners plan inventory investments in the coming months, up one point from April.
In addition, the net percent of owners raising average selling prices increased four points to a net 40% (seasonally adjusted), the highest reading since April 1981. Unadjusted, 5% of owners reported lower average selling prices and 48% reported higher average prices. Price hikes were the most frequent in wholesale (65% higher, 2% lower), retail (53% higher, 5% lower), and manufacturing (47% higher, 1% lower). Seasonally adjusted, a net 43% of owners plan price hikes, up seven points.
The Top Concerns
Eight percent of owners cited labor costs as their top business problem and 26% said that labor quality was their top business problem. Higher labor costs are being passed on to customers through higher selling prices.