The NFIB Optimism Index fell 0.1 points in May to 93.1, marking the fifth consecutive year for the fifth consecutive month. Over the next six months, owners expecting better business conditions fell four points to a 54% net negative, the lowest level recorded. In the 48-year-old survey. Expectations for better business conditions have worsened every month since January.
28 percent of homeowners reported that inflation was the biggest problem in running their business, four points less than in April. The net percentage of homeowners who raised average selling prices rose two percentage points to 72 percent (seasonally adjusted), returning to the highest reading in the survey’s 48-year history in March and 32 points higher than in May 2021.
“Inflation continues to outweigh the compensation that has reduced real incomes across the nation,” said NFIB chief economist Bill Dunkelberg. “Small business owners remain very pessimistic in the second half of the year as supply chain disruptions, inflation and labor shortages have not eased.”
State-specific data is not available, but NFIB State Director Rosemary Elebash said the work remains a critical issue for small businesses in Alabama. “Unemployment has dropped to 2.8 percent, the lowest level in the state’s history, but members of our small business say they still can’t find enough people to work. Employers are willing to train people, but they say they don’t introduce anyone, and because they don’t have enough people to work, they’re still having to cut back on hours and limit the services they provide. “
Other important findings from the national survey include:
- Fifty-one percent of homeowners reported unfulfilled job offers, up four points from April.
- The net percentage of homeowners expecting higher actual sales fell three percentage points from April to a 15% net negative.
- A net 46 per cent of homeowners (seasonally adjusted) reported an increase in compensation, with three points less from April with a view to raising compensation in the next three months with 25 per cent net, two points less than April but historically high.
- 39 percent of homeowners say supply chain disruptions have had a significant impact on their business, three points more. Another 31 percent had a moderate effect and 22 percent had a mild effect. Only 8 percent of owners reported that the last supply chain disruption had no effect.
According to the NFIB’s monthly employment report, labor markets are tight, with 51 per cent of all owners (seasonally adjusted) reporting job vacancies that could not be met within the current period. Ninety-two percent of the job seekers who wanted to fill or were hired were reported to have few or no qualified job seekers. 12% of homeowners mentioned labor costs as a major business issue. Twenty-three percent said quality of work was their main business problem, behind inflation.
Unadjusted, 3 percent of owners reported lower average selling prices and 71 percent reported higher average selling prices. Price increases were the largest in wholesale trade (80 percent higher, 4 percent lower), manufacturing (79 percent higher, 1 percent lower), retail (78 percent higher, 2 percent lower), and construction (77 percent higher, 2 percent lower). lower).
53 percent of homeowners reported capital expenditures in the past six months, one point less than in April. Of those who spent, 36 percent reported spending on new equipment, 21 percent bought vehicles, and 15 percent improved or expanded their facilities. Six% of owners acquired new buildings or land to increase and 12% spent money on new equipment and furniture. 25 percent of homeowners plan to spend on capital in the coming months, two points less than in April.
One percent of homeowners (seasonally adjusted) reported higher nominal sales in the last three months, two points less than in April. The net percentage of owners who expected higher real sales volumes fell three points to a net negative 15%.
The net percentage of homeowners who reported an increase in inventories fell five points to a 1 percent net negative. Seventeen percent of owners reported increases in stocks, and 15 percent reported reductions as strong sales reduced inventories in many companies. Eighty percent of homeowners saw current inventory stocks as “too low” in May, up two points from April. A net 1 percent of homeowners plan to invest in inventory in the coming months.
The frequency of positive earnings trend reports was 24% net negative, seven points lower than in April. Among the owners who reported lower profits, 34 per cent blamed the rising cost of materials, 25 per cent blamed lower sales, 10 per cent cited labor costs, 9 per cent on regular seasonal changes, 8 per cent on lower prices and 3 per cent on higher taxes. or regulatory costs. For owners who reported higher profits, 49 percent credited sales volumes, 18 percent higher prices and 16 percent changed regular season changes.
Two percent of homeowners said they did not meet all of their debt requirements. Twenty-two percent reported that all credit requirements were met and 65 percent said they were not interested in a loan. A 4 percent reported that their last loan was more difficult to obtain than in previous attempts. One percent of homeowners reported that financing was their main business problem. 14 per cent of homeowners reported paying a higher rate on their last loan, two points less than in April.