Worries over a nationwide labor shortage and inflation dragged down the confidence of small business owners in May, according to a survey released Tuesday.
The National Federation of Independent Business Optimism Index dropped two-tenths of a point to a reading of 99.6 in May. This followed three straight monthly increases but was the second straight month in which results undershot expectations. Economists had forecast a rise to 100.7, according to Econoday
“Labor is in short supply and holding back growth, and inflation is rampant on Main Street,” said NFIB chief economist Bill Dunkelberg.
A record-high 48 percent of small business owners in May reported unfilled job openings (seasonally adjusted), according to NFIB’s monthly jobs report. May is the fourth consecutive month of record-high readings for unfilled job openings and is 26 points higher than the 48-year historical reading of 22 perecent. Ninety-three percent of owners hiring or trying to hire reported few or no “qualified” applications for the positions they were trying to fill in May.
“If small business owners could hire more workers to take care of customers, sales would be higher and getting closer to pre-COVID levels,” Dunkelberg said. “In addition, inflation on Main Street is rampant and small business owners are uncertain about future business conditions.”
Five of the 10 components of the index improved, including plans to hire, plans to increase inventories, and sales expectations. Three declined: expectations for the economy to improve, earnings trends, and if now is a good time to expand. The measures of capital outlays and credit conditions were unchanged.