Small business optimism rises, but owners say qualified workers are still hard to find

Small business optimism ticked higher in November despite economic uncertainty and challenges finding suitable workers in the labor market, according to a new report by the National Federation of Independent Businesses (NFIB).

The NFIB Small Business Optimism Index increased 0.8 points in November to 99, remaining above its 52-year average of 98. Six of the 10 components of the index increased, while three declined and one was unchanged.

An increase among small businesses expecting real sales to be higher was the primary contributor to the increase in the Optimism Index. The net percentage of owners expecting higher real sales volumes rose 9 points from October to a net 15%.

"Although optimism increased, small business owners are still frustrated by the lack of qualified workers," said NFIB chief economist Bull Dunkelberg. "Despite this, more firms still plan to create new jobs in the near future."

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Small business owners were focused on labor quality as the single most important problem, as 21% of small business owners cited labor quality as their top concern in November, down 6 points from October.

"Owners have been frustrated by the lack of qualified workers available to fill their open positions. Job openings were above the historical average all year, compensation has increased, but few new workers were actually hired," the NFIB wrote.

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Labor quality concerns surpassed inflation, the second most important concern reported by small business owners at 15%, an increase of 3 points from October.

Nearly two-thirds of small business owners, 64%, reported that supply chain disruptions were affecting their business to some degree. That was an increase of 4 points from October, while the share reporting a significant impact from supply chain disruption rose 3 points to 7%.

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The NFIB found that the net percent of owners raising their average selling prices increased 13 points from October to a net 34%, the highest reading since March 2023 and the largest monthly jump in the history of the survey.

The report suggested there will be continued inflationary pressures. Looking ahead to the next three months, a net 30% of small businesses said they plan to increase prices – a figure that was unchanged from October.

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Small businesses' expectations for better business conditions have declined by 32 points since January. 

In November, just 13% reported that it was a good time to expand their business, unchanged from October and a "relatively weak reading" when compared to other readings during economic expansions, NFIB noted.