Small business optimism plunges in September as labor shortage persists

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Fox Business 12 October, 2021 - 04:30pm

88% of Small Business Owners Hurt by Supply Chain Disruptions

Breitbart 12 October, 2021 - 09:38pm

The optimism of U.S. small-business owners took a bigger than expected hit in September amid ongoing labor shortages and supply chain disruptions.

The National Federation of Independent Business optimism index decreased by 1 point to 99.1, the worst rating since March. The median forecast of analysts polled by Marketwatch was for the index to drop by one-tenth of a point from August’s 100.1.

Five of the ten components of the index declined, three improved, and two were unchanged.

“Small business owners are doing their best to meet the needs of customers, but are unable to hire workers or receive the needed supplies and inventories,” NFIB chief economist Bill Dunkelberg said.

Over 35 percent of owners report supply chain disruptions have had a significant impact on their businesses. Another 32 percent say supply chain disruptions have had a moderate impact, and 21 percent report a mild impact. Only 10 percent of owners report no impact.

Owners are particularly pessimistic about business conditions over the next six months. The index component measuring this fell five points to a net negative 33 percent.

The shares of owners planning to make capital outlays fell to 53 percent, which the NFIB said is historically a weak reading. Three percent of owners reported high sales in the past three months, up three points from August.  A net two percent expect high sales in the next three months.

Plans to create jobs in the next three months fell six points but this measure remains at a high level. Fifty-one percent of owners reported they had job openings they could not fill.

“The outlook for economic policy is not encouraging to owners, as lawmakers shift to talks about tax increases and additional regulations,” Dunkelberg said.

The net share of owners raising average selling prices fell three points to 46 percent. Eight percent of owners reported lower selling prices and 53 percent reported higher prices. Price hikes were most common in wholesale, with 75 percent reporting higher prices. Sixty-seven percent of manufacturers reported higher prices and 71 percent of retail owners reported price hikes. A seasonally adjusted 46 percent of owners are planning to hike prices.

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Small-Business Optimism Dips as Inflation and Hiring Woes Hurt Sentiment

The Epoch Times 12 October, 2021 - 09:30pm

Overall optimism among small-business owners edged down in September while the level of confidence in the six-months-ahead outlook for business conditions fell to a nine-year low as inflation and hiring difficulties took a bite out of sentiment, according to the National Federation of Independent Business (NFIB).

The NFIB’s so-called optimism index fell by one percentage point to 99.1 in September, according to the group’s Oct. 12 Small Business Economic Trends report (pdf).

The downtick in overall optimism came alongside a sharper five-point drop in the six-months-ahead outlook for business conditions. The forward-looking index of future expectations fell to a reading of negative 33 percent, the lowest number since December 2012.

“Small business owners are doing their best to meet the needs of customers, but are unable to hire workers or receive the needed supplies and inventories,” NFIB Chief Economist Bill Dunkelberg said in a statement.

Hiring woes, supply chain problems, rising input costs, and materials shortages have emerged as major issues in recent months, holding back the pace of the economic recovery and fueling fears of persistent stagflation—where inflation stays stubbornly high while economic growth slows.

“Supply chains are still in disarray, with ships and containers piling up on the coasts but only slowly being unloaded and distributed to businesses as truck drivers are in short supply,” the report’s authors wrote. “Inflation is running strong but the Federal Reserve is only running away.”

The NFIB report showed that 51 percent of small business owners in September reported job openings that could not be filled. This is a one percentage point increase from August and a 48-year record high for the third consecutive month. The historical average for the NFIB’s unfilled job openings measure is 22 percent.

“Owners are clearly trying to hire, but are not being very successful in spite of paying higher wages,” the report’s authors wrote. A net 42 percent of small-business owners reported raising compensation in September, up one point from the prior month and the highest reading in 48 years.

Labor costs and applicant quality remained problematic for small-business owners, with the percentage of owners identifying these as their top problem hitting a record high last month.

While the percentage of owners who said they raised prices in September fell by three points to a still-high 46 percent, the percentage of those who said they plan to raise prices in the next three months rose two points to 46 percent.

“In the meantime, inflation is squeezing profits (the major source of operating capital for small firms) so firms are raising selling prices. Just what policies Washington will follow remains uncertain, and so does the future,” the authors of the report wrote.

Economist Nouriel Roubini, renowned for his gloomy-yet-accurate forecast of the 2008 financial crash—a prediction he made at a time of peak market exuberance—told Bloomberg in a recent interview that he thinks the Fed will “wimp out” and “postpone any finishing of tapering or raising rates” if economic growth slows and markets sell off as they did in the fourth quarter of 2018.

Roubini said he believes stagflation will persist for several quarters and that the core PCE inflation gauge, the Fed’s preferred pricing measure, will stay above 3 percent in 2022. That’s in sharp contrast to Fed policymakers, who in their most recent economic projections predicted core PCE would come in at 2.3 percent next year.

Small businesses frustrated by labor shortages afflicting the economy, NFIB finds

MarketWatch 12 October, 2021 - 05:00am

Small-business owners say they have plenty of customers, but in a worrying sign for the U.S. economy, they are growing frustrated by shortages of supplies and skilled labor that are hampering sales.

A closely followed gauge of small-business confidence fell in September to a six-month low, reflecting widespread shortages in the economy that are hampering the speed of the U.S. recovery.

The National Federation of Independent Business said its optimism index slipped one point to 99.1 in September. That’s the lowest reading since March.

What’s the problem? Small businesses complain they cannot find enough skilled workers even after raising pay. Nor can they obtain parts and supplies fast enough to keep up with demand. These problems have also affected the largest businesses across the country.

“Small-business owners are doing their best to meet the needs of customers, but are unable to hire workers or receive the needed supplies and inventories,” NFIB chief economist Bill Dunkelberg said after the survey results.

More than 50% of small businesses said they couldn’t fill open positions last month, a 48-year peak. And the number of companies offering higher pay was also at a 48-year high.

Read: .U.S. adds just 194,000 jobs in September as more people drop out of the labor force

Also: Millions of people earning higher minimum wages can probably thank new Nobel Prize winner David Card

Broad shortages of key parts and supplies in the U.S. have persisted for months and reportedly are getting worse. Ports on both coasts are packed, with ships waiting for days outside harbors before they can unload. Trucks are also in short supply and commercial train carriers are overloaded, too.

These shortages have ignited the biggest burst in U.S. inflation in 30 years and could linger well into next year, economists say. Most companies have to pay more — sometimes significantly more — for parts and supplies. That is, when they can get them at all.

Read: Economy perks up again as delta ebbs, ISM finds, but shortages still a big worry

Large and small businesses alike have raised prices to try to recoup some of their expenses. Yet some say it’s eating into profits or costing them additional sales, the NFIB and other surveys have found.

Small businesses are also increasingly worried, the NFIB said, about the prospect of new taxes and regulations being proposed in Washington.

“The outlook for economic policy is not encouraging to owners, as lawmakers shift to talks about tax increases and additional regulations,” Dunkelberg said.

The NFIB, one of Washington’s most influential lobby groups, has historically resisted these measures.

Moderna has no plans to share the recipe for its COVID-19 vaccine because executives have concluded that scaling up the company's own production is the best way to increase the global supply, the company’s chairman said Monday.

Jeffry Bartash is a reporter for MarketWatch in Washington.

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