Small business owners cite labor costs, quality as biggest threats to outlook
Sentiment among US small business owners fell in September as supply disruptions induced by the pandemic and persistent labor shortages weighed on the economy’s recovery.
The National Federation of Independent Business said on Tuesday that its optimism index fell one point to 99.1 in September, its lowest since March. Five out of 10 components declined, while only three improved.
“Small business owners are doing their best to meet the needs of customers but are unable to hire workers or obtain essential supplies and inventory,” Bill Dunkelberg, chief economist at NFIB, said in a statement. “The outlook for economic policy is not encouraging for bosses, as lawmakers move to talk about tax increases and additional regulations.”
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Owners expecting better business conditions over the next six months have fallen to their lowest level since December 2012.
Labor cost and quality were cited as the biggest threats to small business owners.
This is partly because small businesses are struggling to find workers to fill open positions. 51 percent of all bosses reported job openings they were unable to fill, a record high for the third month in a row. The number of jobs available as per the survey is well above the historical average of 48 years.
Meanwhile, about 42% of small businesses reported increased compensation — another 48-year record high. An additional 30% of owners said they plan to increase compensation over the next three months.
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The survey comes after a new Labor Department report released on Tuesday showed there were an estimated 10.4 million open jobs at the end of August. Although there has been a slight decline since the end of July, it is still a staggeringly high figure; There are about 2.7 million more open jobs than unemployed Americans looking for work.
According to the Job Opening and Labor Turnover Survey (JOLTS), 4.3 million people left their jobs in August, representing about 2.9% of the country’s workforce. report good. The report, released just days after the government’s September jobs report, showed that payrolls increased by just 194,000 last month, far less than the 500,000 expected by Refinitiv economists.
“Workforce shortages are the most significant threat to America’s economic recovery,” the powerful US Chamber of Commerce said in a statement Tuesday morning. “With Friday’s disappointing employment data, it is yet another reminder that the recovery remains very fragile.”