Florida’s small businesses continue to struggle with inflation and labor shortages, despite a slight increase in optimism, as ongoing cost pressures and declining sales challenge operations.
Florida’s small businesses continue to grapple with persistent inflationary pressures, despite a modest uptick in optimism, according to the latest survey from the National Federation of Independent Business (NFIB).
The Small Business Optimism Index climbed 2.2 points in July, reaching 93.7, its highest level since February 2022. However, the figure remains below the historical 50-year average of 98 for the 31st consecutive month, underscoring the ongoing economic challenges faced by entrepreneurs across the state.
Inflation remains the primary concern, with 25 percent of Florida small business owners identifying it as their most significant problem in July—a 4-point increase from June. The survey highlights inflation’s pervasive impact on key aspects of business operations, including pricing strategies, labor costs, and inventory management. Despite recent legislative measures, such as a rent tax reduction, businesses are still contending with rising costs for goods and services, putting further pressure on already narrow profit margins.
“Inflation remains the top business problem for Florida’s small businesses,” said Bill Herrle, NFIB Florida Executive Director. “Although the recent rent tax cut offers some relief, high prices continue to challenge most business operations across the country.”
While 22 percent of businesses reported raising their average selling prices in July, the figure represents a 5-point decrease from June. Furthermore, just 24 percent plan to implement additional price hikes in the coming months—the lowest reading since April 2023.
Labor market challenges exacerbate the impact of inflation, as the survey found that 38 percent of small businesses reported unfilled job openings, a 1-point increase from June. Among those actively hiring, 86 percent reported a lack of qualified applicants. The labor shortage is particularly pronounced in sectors like construction, where job openings increased by 4 points from the previous month, with more than half of firms in the industry struggling to fill positions.
“Cost pressures, particularly labor costs, continue to plague small business operations, impacting their bottom line. Owners face unpredictable months ahead, uncertain of how future economic conditions or government policies will affect them,” said NFIB Chief Economist Bill Dunkelberg.
The struggle to manage costs is also reflected in business investment decisions as only 23 percent of owners intend to make capital expenditures in the next six months, unchanged for the third consecutive month. High interest rates and concerns about future sales are deterring more significant investments, limiting opportunities enhancements.
Sales figures from the report show a net negative 16 percent of owners reporting lower nominal sales over the past three months, a 4-point decline from June. Although the net percentage of owners expecting higher real sales volumes rose slightly by 4 points, it remains in negative territory at -9 percent, marking the highest reading so far this year. Profitability has been equally challenging to maintain, with a net negative 30 percent of businesses reporting lower earnings, primarily due to weaker sales and rising material costs.