Small business owners continue to say it sure looks like we’re headed into a recession. A reliable marker of how businesses are feeling has been released by the National Federation of Independent Business.
The NFIB Small Business Optimism Index increased 1.3 points in December to 91.9, marking the 24th consecutive month below the 50-year average of 98. Twenty-three percent of small business owners reported that inflation was their single most important problem in operating their business, up one point from last month, and replacing labor quality as the top concern.
“Small business owners remain very pessimistic about economic prospects this year,” said NFIB Chief Economist Bill Dunkelberg speaking about recession. “Inflation and labor quality have consistently been a tough complication for small business owners, and they are not convinced that it will get better in 2024.”
Although state-specific data is unavailable, NFIB Missouri State Director Brad Jones said the report underscores the need for a productive legislative session in Jefferson City.
“Entering 2024, our job creators remain unconvinced that economic conditions will improve. Escalating prices continue to put enormous pressure on small business owners, all while they struggle to fill open positions. Hopefully, the General Assembly will put aside their differences and address these challenges this legislative session.”
Key findings include:
- Small business owners expecting better business conditions over the next six months increased six points from November to a net negative 36% (seasonally adjusted), and 25 percentage points better than last June’s reading of a net negative 61%.
- Seasonally adjusted, a net 29% of owners plan to raise compensation in the next three months, down one point from November.
- The net percent of owners raising average selling prices was unchanged from November at a net 25% (seasonally adjusted).
- The net percent of owners who expect real sales to be higher increased four points from November to a net negative 4% (seasonally adjusted), the highest reading since January 2022.
As reported in NFIB’s monthly jobs report, 40% (seasonally adjusted) of all owners reported job openings they could not fill in the current period. Owners’ plans to fill open positions remain elevated, with a seasonally adjusted net 16% planning to create new jobs in the next three months.
The net percent of owners raising average selling prices was unchanged from November at a net 25% seasonally adjusted. Seasonally adjusted, a net 32% plan price hikes in the next three months.
Price hikes were the most frequent in finance (52% higher, 12% lower), retail (49% higher, 8% lower), construction (41% higher, 12% lower), services (36% higher, 5% lower), and professional services (33% higher, 4% lower).
Twenty-three percent of owners reported that inflation was their single most important problem in operating their business, up one point from last month and surpassing labor quality as the top problem.
Seasonally adjusted, a net 36% reported raising compensation, unchanged from November. A seasonally adjusted net 29% plan to raise compensation in the next three months. Nine percent of owners cited labor costs as their top business problem, up one point from November. Twenty percent said that labor quality was their top business problem.
-Metro Voice
