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The
National Federation of Independent Business said its Small
Business Optimism Index dropped 1.8 points to 97.1 last month,
the lowest reading since February 2021.
Scarce workers and rising labor costs remain the main areas of
worry for businesses.
Snarled supply chains as the global economy rebounds from the
COVID-19 pandemic, fueled by massive stimulus from governments,
have unleashed inflation. The pandemic, now in its third year,
has also disrupted labor supply, making it difficult for goods
to move from factories to consumers.
There were a near record 10.9 million job openings at the end of
December.
The NFIB survey showed half of the 1,504 small businesses who
participated in the poll reporting raising compensation. That
was the highest reading in 48 years and was up 2 points from
December. That corroborates to a surge in measures of wage
growth tracked by the government.
About 27% of small businesses said they planned to increase
compensation in the next three months, down 5 points from
December, but still historically high.
Eleven percent said labor costs were their top business problem,
down 2 points from December's 48-year record high reading. About
23% complained about labor quality.
Faced with rising labor costs, the share of small businesses
raising average selling prices jumped 4 points to 61%, the
highest reading since the fourth quarter of 1974. Price hikes
were most frequent in wholesale, manufacturing, retail and
construction industries.
The Federal Reserve is expected to start raising interest rates
next month by at least 25 basis points to tame high inflation.
Economists anticipate as many as seven rate hikes this year.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)
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