Small Business Optimism Inches Higher

Optimism among small business owners is increasing, but remains far below average based on the results of a national survey.

The National Federation of Independent Business Small Business Optimism Index released Oct. 11 rose 0.3 points in September to 92.1.

September marked the third consecutive monthly increase from a low of 89.5 in June. However, it’s also the ninth consecutive month below the near half a century average of 98.

“Inflation and worker shortages continue to be the hardest challenges facing small business owners,” said NFIB chief economist Bill Dunkelberg. 

“Even with these challenges, owners are still seeking opportunities to grow their business in the current period.”

CBIA president and CEO Chris DiPentima said the report “shows that small businesses are doing what they can to rise to meet the significant challenges they are facing.”  

“It also shows that there is work to be done to implement the solutions that will transform the economy and provide opportunities for all,” he said.

Inflation

Thirty percent of surveyed small businesses reported that inflation was their single most important problem. 

According to the U.S. Bureau of Labor Statistics, the consumer price index rose 0.4% in September. Inflation is up 8.2% on a 12-month basis, but down from its peak of 9% in June.  

A net 51% of small businesses raised average selling prices. That’s a two-point decrease and the lowest level in a year.  

Almost one-third (31%) of business owners plan price increases in the next three months, the lowest percentage since January 2021.

Price hikes were most frequent in the retail, construction, transportation, and wholesale sectors.  

Other Findings

• A net -44% of small business owners expect business conditions to improve over the next six months. That’s down two points from August.  

• A net -10% of owners expect real sales to be higher, a nine-point increase from August. 

• 42% of owners reporting lower profits blamed the rise in cost of materials, 21% blamed weaker sales, and 12% cited labor costs.  

• 56% of owners reported capital outlays in the last six months. That’s an increase of four points from August.

• 32% of owners reported that supply chain disruptions had a significant impact on their business. 34% reported a moderate impact and 22% reported a mild impact. Only 10% of owners report no impact from recent supply chain disruptions.

Labor Shortage

After inflation, labor concerns were the among the most important challenges for small business owners.

Forty six percent reported job openings that were hard to fill.That remains historically high, despite falling three points since August.  

A seasonally adjusted net 23% of owners are planning to create new jobs in the next three months. Of those owners, 89% reported few or no qualified applicants.

“Challenges like inflation and the worker shortage are why CBIA is asking candidates to support our Transform Connecticut policy solutions.”

CBIA’s Chris DiPentima

The labor shortage is being acutely felt in Connecticut. The 2022 Survey of Connecticut Businesses showed that 85% of Connecticut employers struggle to find and retain workers, with 39% calling the lack of skilled applicants the greatest obstacle to growth. 

“Challenges like inflation and the worker shortage are why CBIA is asking candidates for elected office to support our Transform Connecticut policy recommendations,” said DiPentima. 

“The policy solutions are specifically designed to address the factors driving the labor shortage and the high costs of living and running a business in Connecticut.  

CBIA is asking candidates for elected office to support our pledge to help transform the state’s economy to make it more robust, vibrant and equitable for all.”