Small business optimism remains on the rocks, with many owners viewing inflation as a top problem for small businesses, according to a new survey from the National Federation of Independent Business (NFIB)
According to the report, the NFIB Small Business Optimism Index declined again last month, down 2.4 points to 93.2. The index, now the lowest since the height of the pandemic, marks the third straight month of readings below the 48-year average of 98.
Of those surveyed, 31% percent of owners pointed to inflation as the single most important problem in their business, up 5 points from February and the highest reading since the first quarter of 1981. As a result, Inflation has now replaced “labor quality” as the No. 1 problem facing small business owners.
“Inflation has impacted small businesses throughout the country and is now their most important business problem,” said NFIB Chief Economist Bill Dunkelberg. “With inflation, an ongoing staffing shortage, and supply chain disruptions, small business owners remain pessimistic about their future business conditions.”
While Florida and much of the country continue to grapple with labor issues, inflation has accelerated due to supply chain constraints, the Russian-Ukraine war and growing consumer demand.
Prices that consumers pay for everyday items continue to surge, with March hitting a new 40-year high, according to the Labor Department. The new data released on Tuesday found that the consumer price index (CPI) — which measures a wide range of goods including gas, groceries, energy prices and rents — jumped 8.5% in March from a year ago, the fastest annual gain since December 1981, when inflation hit 8.9%.
The rising costs from inflation have naturally impacted small business owners, with the survey finding that the share of owners raising average selling prices increased 4 points to a net 72% last month, the highest reading in the survey’s history.
NFIB also reported that price hikes were the most frequent in wholesale (84% higher, 0% lower), construction (83% higher, 3% lower), agriculture (78% higher, 2% lower), and retail sales (77% higher, 2% lower). Seasonally adjusted, a net 50% of owners plan price hikes, up four points from February.
Additionally, the survey found that 47% of owners reported job openings that could not be filled, down 1 point from February. While business owners expecting better business conditions over the next six months decreased 14 points to a net negative 49%, the lowest level recorded in the 48-year-old survey.
Despite no state-specific data, the voice of small businesses in the Sunshine State noted that even Florida, which navigated the pandemic well, isn’t immune from the effects of inflation.
“Florida’s economy has held up remarkable well the last couple of years, but we aren’t immune from soaring inflation and other challenges facing small businesses throughout the country,” added NFIB State Executive Director Bill Herrle.