[ad_1]
Optimism among small business owners retreated in December to near its lowest level since 2013 as the inflation and hiring outlook worsened in the year’s final month.
The National Federation of Independent Business’ (NFIB) optimism index fell to 89.8 last month from 91.9 in November, the group said in a report Tuesday. Eight of the index’s ten components fell in December.
Only June 2022’s reading of 89.5 prevented Tuesday’s report from registering a new 10-year low.
“Overall, small business owners are not optimistic about 2023 as sales and business conditions are expected to deteriorate,” said NFIB Chief Economist Bill Dunkelberg said in the report.
Inflation remains the single most important issue impacting small businesses, with 32% of business owners flagging this as the biggest problem facing their company.
Small businesses have passed some of those costs on to customers, but it appears this impulse could be waning. The net share of owners raising their average selling prices decreased to 43%, the lowest level since May 2021, while 24% of owners plan price hikes, which is down from November’s numbers.
Despite signs of price pressures easing, it wasn’t enough to increase optimism, according to some economists.
“The plunge in gas prices usually would be enough to boost small business owners sentiment, but the hit from higher interest rates and the volatility in the stock market right now are more powerful forces,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote following the release. “As a result, the index is now at levels which in the past have been followed by recession.”
Labor remains the second-biggest problem for small businesses, with 41% of all owners reporting job openings they could not fill in the current period.
Fifty-five percent of owners reported hiring or trying to hire in December, and 93% those businesses hiring or trying to hire reported few or no qualified applicants for open positions.
Still, the survey’s hiring metrics remain elevated, with an adjusted net 17% of small businesses — or the difference between businesses planning to increase staff and those planning to reduce staff — planning to create new jobs in the next three months. This number is, however, lower than the 32% seen in August 2021.
“The widely anticipated (predicted) recession did not arrive in 2022, but is still expected this year,” the report said. “The negative impact of the dramatic increase in interest rates has not been fully felt, and more rate hikes are almost certain early in the year.”
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
Read the latest financial and business news from Yahoo Finance
Download the Yahoo Finance app for Apple or Android
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and YouTube
[ad_2]
Source link