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For the first time this year, small-business optimism increased–but inflation continues to worry owners.
The Small Business Optimism Index from the National Federation of Independent Business reached 89.7 in April, climbing 1.2 points from March. And yet, it’s still the 28th consecutive month below the index’s 50-year average of 98, making clear that “small business owners remain historically very pessimistic,” said NFIB chief economist Bill Dunkelberg in a press release.
One big reason: inflation.
According to the report, 22 percent of owners identified inflation as their top business problem. And though that’s a three-point dip from March, it demonstrates the still-weighty cost pressures on business owners, “including historically high levels of owners raising compensation to keep and attract employees,” Dunkelberg adds.
Indeed, the number of firms raising compensation (a net 38 percent) and planning to do so over the next three months (a net 21 percent) remain historically high, according to the report. And with the March Consumer Price Index from the Bureau of Labor Statistics coming in higher than expected at 3.5 percent, cost pressures could plague owners longer than hoped.
Meanwhile, labor quality concerns–while having “eased considerably over the last two quarters,” according to the report–rose in April. Forty percent of owners reported job openings they couldn’t fill in the latest NFIB jobs report, which was a three-point increase from March’s reading, the lowest since January 2021.
Still, the report offers some positive signs. Sales expectations recovered somewhat from their eight-point plunge in March with a six-point increase, reaching a net negative 12 percent.
And, even on the inflation front, there’s some improvement: A net 26 percent of owners said they plan to hike prices in April, a seven-point decline from March and the “lowest reading since April of last year,” according to the report. Meanwhile, the percentage raising average selling prices fell three points to a net 25 percent.
On Wednesday, the BLS will release the latest Consumer Price Index, which could indicate how these inflation pressures may ease or grow in the coming weeks.
Attracting and keeping good associates
While you are having to pay more to attract good associates, you should also expect more from those associates. New employees want to feel needed and to show they are a welcome addition to your team. Providing quality feedback, on a regular basis, is important to associates that are looking for a career, not just a job. Feedback from regular mystery shop provide the consistent conversation tool for motivating and growing associates. Many of our clients have us mystery shop anticipated new hires, at their previous place of business (if possible) to determine their customer engagement skills.
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SARAH LYNCH AND CARL PHILLIPS
