Detroit City Wire

The latest report from the National Federation of Independent Business (NFIB) indicates that small business optimism remains steady despite ongoing inflation. Many employers on Main Street are expected to raise prices to cope with economic pressures.

In recent findings, 12% of small business owners reported higher sales over the past three months, an improvement of two points from May. The percentage expecting higher sales remained unchanged at 13%. Inflation continues to be a primary concern for 21% of small business owners, a slight decrease from May. Labor quality was cited as the top problem by 19% of respondents.

Price adjustments have been notable, with 27% of small businesses raising their prices in May, up by two points from the previous month. However, plans to increase prices in the next three months have slightly decreased to 26%.

Capital outlays have seen a decline; only 52% of small business owners reported such expenditures in the last six months, marking the lowest reading since August 2022. Expectations for capital purchases in the upcoming three months remain unchanged at 23%. Credit conditions are not anticipated to improve, with -7% of owners expecting better conditions.

Interest in loans has diminished; 61% of small business owners are not interested in borrowing, an increase from May. Conversely, regular borrowing has decreased to 28%. Financing concerns were minimal, with only 4% citing it as their top problem.

Expansion plans among small businesses remain stagnant; just 4% believe that the next three months will be a good time for growth.

Data from Intuit QuickBooks Small Business Index shows an uptick in employment within small businesses for the first time since early 2023. Sectors such as agriculture, natural resources, and mining led this growth with a month-over-month increase of 0.58%. Construction and health services also saw employment gains.

However, some sectors experienced declines. The information sector faced a significant drop with a decrease of 0.51%, alongside leisure, hospitality, utilities, transport, and warehousing sectors.

Regionally, the Plains led with a growth rate of 0.62%, while the Southwest region did not see any employment growth.

The NFIB's latest report highlights robust hiring plans among small businesses despite persistent worker shortages driving wage inflation. In June, job openings that could not be filled dropped five points but remained significantly above historical averages at 37%.

Hiring efforts were strong; about 60% attempted to hire in June without change from May. Among those hiring, a substantial majority (85%) reported few or no qualified applicants available.

Plans for job creation stayed consistent at 15%, maintaining the highest level for this year so far. Compensation increases are planned by 22% of owners over the next three months—a rise from May’s figures.

Openings for skilled workers declined by six points to 31%, while unskilled labor openings increased slightly to 16%. Notably, over half (51%) of construction-related businesses reported unfilled job openings.

Further details on these reports can be found through publications released by U.S Chamber and NFIB earlier this month.