The NFIB Small Business Optimism Index fell 2.1 points in December to 89.8, falling below its 49-year average of 98 for the 12th straight month. Owners expecting a better business environment over the next six months slipped 8 percentage points from November to a net -51%. Inflation remains one of the most important business issues, with 32% of owners reporting inflation as the biggest issue in running their business. Click here to read the full report.
NFIB chief economist Bill Dunkelberg said, “Overall, small business owners are less optimistic about 2023, with sales and business conditions expected to deteriorate.” We are managing some economic uncertainty and persistent inflation, and we continue to make business and operational changes to compensate.”
State-specific data is not available, but NFIB State Rosemary Elebash said: Together, these issues create a lot of uncertainty that is clearly affecting the optimism of small businesses here in Alabama. ”
Key national findings include:
- 41% of owners reported difficulty filling vacancies that were historically very high, down 3 percentage points from November.
- The net percentage of owners who increased their average sales price decreased by 8 points to 43% net (seasonally adjusted), a historical high.
- The net percentage of owners expecting higher real sales fell 2 points from November to a net -10 percent.
As reported in the NFIB’s monthly employment report, owner position addition plans remain high, with a seasonally adjusted net 17% expected to create new jobs in the next three months. Overall, 55% of her owners reported hiring or attempting to hire in her December. Her 93% of those hiring or looking to hire report that there are few or no qualified applicants for the positions they are trying to fill.
55% of owners report having made a capital investment in the last six months. Of those spending, 37% reported spending on new equipment, 22% reported spending on a purchased car, and 12% reported spending on new fixtures and furniture. 11% improved or expanded their facilities and 4% acquired new buildings or land for their expansion. 23% of owners are planning capital expenditures in the next few months.
A net -8% (seasonally adjusted) of all owners reported a one-point drop in nominal sales over the past three months from November. The net share of owners expecting an increase in real sales volume deteriorated by 2 points to a net -10%.
The net percentage of owners reporting an increase in inventory decreased by 5 points to 0 net percent. 15% reported an increase in inventory and 16% reported a decrease. Recently, 23% of owners reported that supply chain disruptions had a significant impact on their business. Another 30% reported moderate effects and 32% reported mild effects. Only 13% of owners reported being unaffected by recent supply chain disruptions.
A net 1% of owners considered their current stock inventory to be ‘too low’ in December, up 3 percentage points from November and balanced overall. By industry, shortages are most frequently reported in manufacturing (13%), retail (12%), transportation (12%) and agriculture (11%). A net minus 4% of owners plan to invest in inventory in the coming months.
The net share of owners raising average sales prices fell 8 percentage points from November to a seasonally adjusted net 43%, the lowest level since May 2021. Prices increased the most in wholesale (+77%, -7%), manufacturing (+60%, -4%), construction (+59%, -8%) and transportation (+59%, -6%). )am. ). A net 24% (seasonally adjusted) of owners plan to raise prices, down 10 percentage points from November.
Seasonally adjusted, a net 44% of owners reported a pay increase. A net 27% plan to raise their pay within the next three months, down one point from November. Of him, 8% of owners cited labor costs as their biggest business problem, and 23% said labor force quality was their biggest business problem.
The frequency of reporting positive earnings trends was a net -30%, down 8 percentage points from November. Of the owners who reported reduced profits, 30% increased material costs, 24% slowed sales, 12% labor costs, 9% price drops, 8% normal seasonal changes, and 3 % is tax increase or regulatory cost. For owners reporting higher profits, 43% cite sales volume, 18% cite price increases, and 17% cite normal seasonal fluctuations.
2% of owners report that all their borrowing needs are not met. 25% reported that all credit needs were met and 62% said they were not interested in a loan. However, loan rates have risen significantly, rising from an average of 5% in January 2022 to 7.7% in December.
The NFIB Research Center has collected data on small business economic trends in quarterly surveys since the fourth quarter of 1973 and monthly surveys since 1986. Survey respondents are randomly drawn from members of the NFIB. Reports are published on the second Tuesday of each month. This survey was conducted in December 2022.