American small businesses are feeling less optimistic in the face of ongoing labor shortage and supply chain hiccups, according to a new report from the National Federation of Independent Businesses (NFIB).
The NFIB said on Tuesday (Aug. 10) that its Small Business Optimism Index dropped 2.8 points in July to 99.7, erasing the gain from the previous month.
“Small business owners are losing confidence in the strength of the economy and expect a slowdown in job creation,” said NFIB Chief Economist Bill Dunkelberg. “As owners look for qualified workers, they are also reporting that supply chain disruptions are having an impact on their businesses. Ultimately, owners could sell more if they could acquire more supplies and inventories from their supply chains.”
As Reuters noted in its report on the NFIB findings, the results come at a time when the economy is showing signs of cooling. In addition to supply chain troubles hurting manufacturing growth, consumers are showing more concern about inflation.
Among key findings from the report was a decrease in sales expectations over the next three months by 11 points to a net negative 4 percent of business owners. There was also a decline in the number of owners who expect business conditions to improve over the next six months (falling eight points to a net negative 20 percent). Additionally, the report noted an eight-point drop in earning trends over the last three months, to a net negative of 13 percent.
As the NFIB reported in its monthly jobs report, nearly half of all employers, 49 percent, reported having job openings they couldn’t fill, a 48-year record high. That’s up slightly from June, when the NFIB found that 48 percent of small businesses were seeking new employees.
“The labor shortage is holding back growth for small businesses across the country,” NFIB’s Dunkelberg said at the time. He noted that small businesses would return to near pre-pandemic levels of sales if there were more people to meet the needs of their customers.
Learn more: Report: Nearly Half Of SMBs Need More Employees