Small Businesses Struggle with Inflation and Labor Shortages

Small business optimism fell below its 49-year average for the 10th consecutive month in October as owners grapple with accelerating inflation and sliding sales, the National Federation of Independent Business (NFIB) said. The NFIB's Small Business Optimism Index declined 0.8 points to a reading of 91.3, well below its 49-year average of 98, as inflation and labor shortages continue to challenge small business owners.

Thirty-three percent of owners reported that inflation was their single most important problem in operating their business, three points higher than in September’s reading. Half of all firms said they are raising prices due to inflation. The share of owners who expect sales to be higher decreased three points from September to a net negative 13%.

Nearly half, or 46% of owners also reported job openings were hard to fill, unchanged from September. Of those trying to hire, 90% of owners reported few or no qualified applicants for the jobs they were trying to fill.

A net 44% of respondents reported raising pay to attract workers, with another 32% planning to raise compensation in the next three months, up nine points from September and the highest since October 2021. Ten percent of owners cited labor costs as their top business problem and 23% cited labor quality.