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Inflation outpaced the quality of workers in December, becoming the biggest problem for businesses
Washington DC (January 9, 2024) – NFIB Small Business Optimism Index In December, it rose 1.3 points to 91.9, ranking 24th.th 23% of small business owners say inflation is the single most important issue in running their business, up 1 point from last month, and workforce replacement is their top concern. It has become.
“Small business owners remain very pessimistic about this year’s economic outlook,” he said. Bill Dunkelberg, NFIB Chief Economist. “Inflation and labor quality are consistently challenging issues for small business owners, and we are not confident that the situation will improve in 2024.”
Key findings include:
- Small business owners who expect business conditions to improve over the next six months improved by 6 points from November to a net negative 36% (seasonally adjusted), an improvement of 25 points from last June’s net negative 61%. .
- On a seasonally adjusted basis, a net 29% of owners plan to increase compensation within the next three months, down 1 percentage point from November.
- The net percentage of owners who increased their average sales price was unchanged from November at a net 25% (seasonally adjusted).
- The net percentage of owners expecting real sales to increase further improved by 4 points from November to a net negative 4% (seasonally adjusted), the highest since January 2022.
As reported in NFIB’s Monthly Employment Report, 40% of all business owners (seasonally adjusted) reported that they were unable to fill job openings within the current period. Owners’ plans to fill open positions remain high, with a seasonally adjusted net 16% planning to create new jobs in the next three months. As long as consumer spending continues, small businesses will need more workers.
58% of owners reported making capital investments in the next six months, down 3 percentage points from November. Of those spending, 40% reported spending on new equipment, 22% acquired a vehicle, and 19% improved or expanded their equipment. 11% spent money on new fixtures and furniture, and 5% acquired new buildings or land for expansion. 24% (seasonally adjusted) plan to make capital investments in the coming months, up 1 percentage point from November.
The net negative 11% (seasonally adjusted) for all owners who reported an increase in nominal sales over the past three months was a 6-point improvement from November. The net percentage of owners expecting real sales volume growth improved by 4 points to a net negative 4%.
The net percentage of owners reporting inventory increases increased by 1 point to a net negative 2%. Without seasonal adjustment, 12% reported an increase in inventory and 15% reported a decrease in inventory. A net negative 5% of owners believed current inventory levels were “too low” in December, down 5 points from November. By industry, shortages were most frequently reported in finance (16%), retail (12%), and manufacturing (11%). Owner Net Minus 5% plans to invest in inventory in the coming months, and weak sales will be met with current inventory.
The net percentage of owners increasing their average sales price was unchanged from November at a seasonally adjusted net of 25%. On a seasonally adjusted basis, a net 32% price increase is planned over the next three months.
The sectors with the highest price increases were Financials (up 52%, down 12%), Retail (up 49%, down 8%), Construction (up 41%, down 12%), and Services (up 36%, down 5%). )Met. , professional services (33% higher, 4% lower).
23% of business owners say inflation is the single most important issue in running their business, up one point from last month, surpassing the quality of workers as the top issue.
On a seasonally adjusted basis, a net 36% reported compensation increases, unchanged from November. The company plans to increase compensation by a net 29% seasonally adjusted over the next three months. 9% of owners cited labor costs as their biggest operational issue, up 1 point from November. 20% said the quality of workers is their biggest business issue.
The frequency with which earnings were reported to be trending positively was a net negative 25%, an improvement of 7 points from November. Among owners who reported a decrease in profits, 31% cited poor sales, 17% cited increased material costs, 16% cited lower prices, and 9% cited labor costs. Among owners who reported an increase in profits, 48% cited sales volume, 19% cited normal seasonal fluctuations, and 14% cited increased sales prices.
3% of owners said all of their borrowing needs were not met. 25% said all of their financing needs were met, and 61% said they were not interested in financing. A net 8% said it was harder to get a loan than their last loan.
of NFIB Research Center has been collecting data on small business economic trends through quarterly surveys since the fourth quarter of 1973 and monthly surveys since 1986. Survey respondents were randomly selected from among NFIB members. This report is published on the second Tuesday of each month. This study was conducted in December 2023.
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