Inflation Continues To Hinder The Small Business Economy, NFIB finds

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This year, the National Federation of Independent BusinessNIBThe Small Business Association, which promotes the interests of small companies in the US, celebrates 50 years. A survey of small business economic trends. The NIB Research Center began collecting quarterly data on small business economic trends in 1973 and has conducted monthly surveys since 1986. Respondents are drawn randomly from the NFIB membership.

The survey points to small business owners who are less optimistic about the current economic climate, according to the October 2023 survey. The NFIB Optimism Index fell 0.1 point to 90.7 in October, indicating 22.Th month below the 50-year average. The last time the Optimism Index was above average was December 2021.

Key findings during the period include:

· 22% of owners reported this Inflation Down one point from last month, it was their single most pressing problem in running their business.

· Owners The expectation of better business conditions in the next six months has not changed by 43% from September

· 17% of owners reported strong nominal sales in the past three months, the lowest reading since July 2020.

· 43% of owners reported Job openings that are difficult to fillIt has not changed since September and is historically very high. Meanwhile, He plans to collect 24% compensation In the next three months.

“October data shows that small businesses are still recovering, and owners are not optimistic about better business conditions,” said NFIB Chief Economist Bill Dunkelberg. “As labor and energy costs are not falling, small business owners are not increasing their inventory, which makes for a bleak outlook for the rest of the year.”

The frequency of reports of positive profit trends was a net negative of 32%, a decrease of eight points from September. Among the reporting owners Lower Profit:

· 32% responsible Poor sales,

· 21 percent are responsible Increase in the price of materials,

· 14% mentioned Labor costs,

· 10% is quoted Low prices,

· 7% mentioned the usual Seasonal changeAnd

· 4% mentioned High tax or regulatory costs.

Reporting to owners higher Profit:

· 55% counted. Sales volumes,

· 20% is quoted as usual Seasonal changeAnd

· 7% mentioned High selling price.

Small business loans and expenses

NFIB reports that 23 percent of small businesses have met all of their credit needs and 64 percent have no credit needs at this time. Only 2 percent of company owners said their credit needs were unsatisfied.

However, 22% of the owners reported that they paid high interest rates on their recent loans and a net 7% reported that it was more difficult to get the last loan than the previous attempts. Among NIB respondents, 24% plan capital expenditures in the next few months and 5% of owners say financing is their top business concern.

Among those who spend:

· 37 percent reported spending on new devices.

· 24% of purchased vehicles;

· 18% improved or expanded facilities;

· 12% spent money on new furniture and furnishings, and

· 7% acquired new buildings or land for expansion.

Meanwhile, 57% of owners reported capital spending in the past six months, unchanged from September.

Sales figures

Some reasons for concern: A net -17% of all owners reported high-profile sales over the past three months, down nine points from September and the lowest reading since July 2020. The net percentage of owners expecting higher actual sales volume improved three points to a net -10%.

A net 30% (seasonally adjusted) of owner-occupiers increased their average selling price, and 22% reported inflation as their single biggest problem in running their business.

The impact of labor costs on small businesses

in NFIB Monthly Activity Report, seasonally adjusted net 17% of owners plan to create new jobs in the next three months. Overall, 61% of owners reported hiring (or trying to) in October. 90% of owners who have hired or tried to hire have reported Few or no qualified applicants For the positions you are trying to fill. Some 36% of owners have paid compensation (unchanged since September), while 24% of owners plan to collect compensation in the next three months. Nine percent cited labor costs as their top business problem, while 23 percent said labor quality was their top business problem.

NFIB’s 2023 survey confirms what experts who have been following small business economic trends are saying: Prices are up, but so are costs, and business owners are concerned about lagging inflation. Borrowing costs could rise again as we approach 2024, leaving open the possibility of further interest rate hikes to reach the Federal Reserve’s target of 2% inflation.

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