Small businesses are becoming increasingly negative about the future of the economy, reporting higher prices, difficulty finding workers and shortages of key materials.
That’s the picture that emerges from the monthly Small Business Optimism Index survey from the National Federation of Independent Business released on Tuesday. The index declined 0.9 points to 98.2 last month.
While the overall index declined, some components reflected a worsening of conditions. Owners expecting better business conditions over the next six months fell 4 points to a net negative 37%, with the indicator registering a 17-point drop over the past three months. It is now at its lowest level since November 2012.
“Small business owners are attempting to take advantage of current economic growth but remain pessimistic about business conditions in the near future,” said NFIB Chief Economist Bill Dunkelberg. “One of the biggest problems for small businesses is the lack of workers for unfilled positions and inventory shortages, which will continue to be a problem during the holiday season.”
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Nearly half, 49%, of owners reported being unable to fill job openings, a decrease of 2 points from September, with 44% saying they are raising wages, a 48-year record high reading.
While all businesses have reported both labor and material shortages, small firms are more vulnerable as they tend to hire locally and also are more represented among the lower-wage services sector that has been hit hard by the effects of the coronavirus.
Still, there was some good news on the job front Friday, when the Labor Department reported employers added 531,000 jobs, led by the leisure and hospitality sectors.
“The economy created 531,000 new non-farm jobs during the month, well above the expected 450,000, and added an additional 235,000 from revisions to the prior two months,’ David Joy, chief market strategist at Ameriprise, wrote Monday. “The unemployment rate fell to 4.6 percent. Private payrolls were particularly strong, especially in the travel and leisure sector as the economy continues to normalize.”