Main menu


SMB expectations for future conditions hit record low

featured image

Owners report inflation as biggest business problem since 1980

Washington DC (July 12, 2022) – The NFIB Small Business Optimism Index fell 3.6 points in June to 89.5, falling below its 48-year average of 98 for the sixth month in a row. Small business owners expect the business environment to improve over the next six months, dropping 7 points to a net -61%. , the lowest level recorded in the 48-year study. Expectations for favorable terms have deteriorated month by month this year.

Inflation continues to be the biggest problem for small businesses, with 34% of owners reporting it as the single most important problem running their business, an increase of 6 percentage points from May and the fourth highest in 1980. It was the highest level since the quarter.

“As inflation continues to dominate business decisions, small business owners’ expectations of a better business climate have reached new lows. NFIB Chief Economist Bill Dunkelberg“The outlook for economic policy is also bleak, as policy talks shift to higher taxes and tighter regulations, in addition to pressing challenges facing small business owners, including inflation and labor shortages. “

Key findings include:

  • The net percentage of owners expecting higher real sales fell 13 points from May to a net -28%, a significant drop.
  • Fifty percent of owners reported that they were unable to fill their historically very high job openings, down one percentage point from May.
  • The net percentage of owners who increased their average sales price fell 3 points to 69% net seasonally adjusted, following May’s record high.

Owner plans to fill vacant positions remain high, with a seasonally adjusted net 19% expected to create new jobs over the next three months, as reported in the NFIB’s monthly employment report, but May 94% of those hiring or looking to fill reported few or no qualified applicants for the positions they were looking to fill.

51% of owners have reported capital expenditure in the last six months, down two percentage points from May. Of those spending, 37% reported spending on new equipment, 23% on purchasing vehicles, and 14% on improving or expanding facilities. 5% acquired new buildings or land for expansion and 13% spent money on new fixtures and furniture. Twenty-three percent of owners are planning a capital investment in the next few months, down 2 percentage points from May.

A net -2% (seasonally adjusted) of all owners reported a 3 percentage point drop in nominal sales over the past three months from May. The net percentage of owners expecting actual sales volume decreased by 13 points to a net negative 28%.

The net percentage of owners reporting an increase in inventory decreased by 3 points to a net negative 4%. 39% report that supply chain disruptions have had a significant impact on their business. Another 30% report moderate impact and 23% report mild impact. Only 6% reported being unaffected by recent supply chain disruptions.

A net 5% of owners deemed June’s current stock inventory “too low”, down 3 percentage points from May, but still surprisingly high. By industry, shortages were most frequently reported in manufacturing (19%), retail (18%), agriculture (18%), construction (16%) and non-professional services (15%). A net minus 2% of owners plan to invest in inventory in the coming months.

The net percentage of owners who increased their average selling price decreased by 3 percentage points from May to 69% net (seasonally adjusted). Price hike activity over the past 12 months has escalated to levels not seen since his early 1980s, when prices were rising at double-digit rates.

Unadjusted, 4% of owners reported a decrease in average selling price and 69% reported an increase in average selling price. Prices increased the most in retail (up 80%, down 3%), transportation (up 78%, down 0%), construction (up 75%, down 4%) and wholesale (up 69%, down 7%). % decline). low). 44% net plan price increase, seasonally adjusted.

A net 48% (seasonally adjusted) reported a salary increase, down 1 percentage point from May. A net 28% of owners plan to increase their pay in the next three months, up 3 percentage points from May and very high on record. Eight percent of owners cited labor costs as their biggest business issue, and 23% said labor force quality was their biggest business issue.

The frequency of reporting a positive earnings trend was a net negative 25%, down 1 percentage point from May. Of the owners who reported lower profits, 30% cited rising material costs, 16% citing slow sales, 14% citing labor costs, and 14% citing falling prices. , 7% cited normal seasonal changes and 2% cited rising taxes or regulatory costs. For owners reporting higher profits, 51% acknowledged sales volume, 19% cited higher prices, and 17% cited normal seasonal changes.

1% of owners report that their borrowing needs are not all met. Twenty-seven percent reported having all their credit needs met, and 61% said they were not interested in financing. A net 3% reported that their last loan was harder to obtain than their previous attempts. Only 1% reported that funding was their biggest business problem.

of NFIB Research Center has collected data on small business economic trends in quarterly surveys since its fourth Quarterly 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 June 2022.