Small business owner optimism fell last month but remained higher than average, according to the National Federation of Independent Business.
The National Federation of Independent Business Small Business Optimism Index fell 2.3 points last month to 102.8, which is still higher than its 51-year average of 98. The uncertainty index increased 14 points to 100, following two months of declines.
Owners expecting the economy to grow improved five points to a net 47 percent. Eighteen percent listed inflation as their most pressing problem in operating their business, down two points from December and its lowest figure in more than three years.
Eighteen percent also cited labor quality as their No. 1 problem. The vast majority of small businesses trying to fill open positions reported few or no qualified applicants. Thirty-three percent raised compensation, up four points from December. A net 20 percent expect to raise compensation in the next three months, down four points.
Owners raising their average selling prices dropped two points from December to a net 22 percent. A net 26 percent planned price hikes in January, down two points from the previous month. A net negative 14 percent of owners saw higher nominal sales in the past three months, down one point from December.
“Small business owners remain optimistic regarding future business conditions, but uncertainty is on the rise,” said NFIB Chief Economist Bill Dunkelberg. “Hiring challenges continue to frustrate Main Street owners as they struggle to find qualified workers to fill many open positions. Meanwhile, fewer plan capital investments as they prepare for the months ahead.”
Other report findings included:
- The frequency of positive profit trend reports improved one percent to a net negative 25 percent as owners reporting lower profits cited weaker sales, typical seasonal changes, rising materials costs and labor expenses.
- Fifty-eight percent of owners had capital outlays in the last six months, up two percent from December. Of those, 41 percent spent on new equipment, 24 percent purchased vehicles, and 16 percent improved or expanded facilities.