A new survey found that U.S. small business confidence has dropped to a six-month low and found that inflation and difficulty in filling positions were top issues cited.
The National Federation of Independent Business announced Tuesday that its Small Business Optimism Index decreased by 2.1 points in December to 89.8, which is the lowest since June and marks the twelfth consecutive month that the index was below its 49-year average of 98. Small business owners who expect better business conditions over the next six months dropped by 8 points between November and December, falling to a net-negative of 51 percent, according to the release.
"Overall, small business owners are not optimistic about 2023 as sales and business conditions are expected to deteriorate,” Bill Dunkelberg, the federation's chief economist, said in the statement. "Owners are managing several economic uncertainties and persistent inflation and they continue to make business and operational changes to compensate."
Inflation remained a top issue for small-business owners, as 32 percent said it was the top problem in their operations. Worker shortages also remained a problem, as 41 percent of business owners reported that open job positions were difficult to fill, which is a slight downtick from the 44 percent who reported the same issue in November.
The survey also found that 93 percent of owners hiring or trying to hire new people said there were few or no qualified candidates for the positions they were trying to fill. Twenty-seven percent of small-business owners said they planned to increase compensation for employees over the next three months.
The percentage of owners raising their average selling prices decreased eight points from November to 43 percent, according to the release. Supply chain issues continued to cause problems for the owners, with just 13 percent reporting that recent supply chain disruptions had no impact on their business.
The National Federation of Independent Business conducts surveys each month, with respondents randomly drawn from the federation's membership.