Friday, September 17, 2021

Small-business optimism about future conditions plummets to 8-year low, hiring difficulties hit 48-year high

Overall optimism among small-business owners ticked up slightly in August, although confidence levels in the six-month-ahead outlook for business conditions fell to an eight-year low, while hiring difficulties hit a 48-year high. Level reached, a new report reveals.

The so-called optimism index rose 0.4 percentage points in July to August to 100.1, according to the National Federation of Independent Business (NFIB)’s September 14 Small Business Economic Trends Report (PDF).

The six-month forward outlook for business conditions declined sharply by eight points, along with an uptick in overall optimism. The forward-looking index of future expectations fell to a negative 28 percent reading, the lowest number since January 2013.

“As the economy progresses into the fourth quarter, small-business owners are losing faith in the strength of future business conditions,” said Bill Dunkelberg, chief economist at NFIB.

Also, 50 percent of small business owners reported job openings that could not be filled. This is an increase of one percentage point since July and a record high of 48 years.

“The biggest problem small employers face right now is finding enough labor to meet their demand and for many people, managing supply chain disruptions,” Dunkelberg said.

Small businesses responded to the hiring crunch by increasing pay, with 41 percent reporting increased compensation in August, up three points from July and also at a 48-year high. Ten percent said labor cost was their top business problem while 28 percent said labor quality was their main concern, with both readings reaching record highs.

“As the economy progresses into the fourth quarter, the big question mark is labor, its availability, its cost and impact on inflation,” wrote the report’s authors.

Inflation will not be a problem for businesses as long as they can pass rising input costs, including labor, onto consumers in the form of higher selling prices, the authors argued, “but if consumers become price-shy, Profits will be squeezed and firms will have to quickly adjust costs including labor costs.”

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Upward pressure on labor costs was a major theme in the Chicago Federal Reserve’s recent report on business conditions in the central bank’s 7th District, which painted a picture of slow growth and record-high labor cost inflation.

The Chicago Fed Survey of Business Conditions, released on September 13, shows that the headline business activity index dropped from a plus 14 in July to a minus 2 in August, indicating that August’s growth fell below the trend. The labor cost index rose to a series high of more than 42 in August, up two points from July and the highest reading in the series’ eight-year history.

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Meanwhile, the Fed’s so-called Beige Book, which provides a snapshot of business conditions across the Fed’s 12 districts and which was partially informed by data from the Chicago Fed, shows that many facing input cost inflation Businesses said they plan to pass on the higher prices. consumer.

Consumer price inflation in the 12 months to August stood at 5.3 per cent, down 0.1 per cent from the figures for June and July, the highest annual increase since 2008.

Tom Ozimek has an extensive background in journalism, deposit insurance, marketing and communications, and adult education. The best writing advice he’s heard from Roy Peter Clark: ‘Hit your goal’ and ‘Leave the best for last.’

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This News Originally From – The Epoch Times

Small-business optimism about future conditions plummets to 8-year low, hiring difficulties hit 48-year high
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