The U.S. continues to struggle with labor and supply chain woes brought on by the COVID-19 pandemic, but the latest data show the top problem cited by small business owners is now high prices.
The National Federation of Independent Business' Small Business Optimism Index for March indicated that inflation has replaced labor quality as the number one problem facing small businesses, with 31% pointing to soaring prices as their greatest challenge – up five points from the month before and the highest reading since early 1981.
"Inflation has impacted small businesses throughout the country and is now their most important business problem," NFIB chief economist Bill Dunkelberg said.
The net percentage of respondents who reported raising average selling prices also hit a new record high in the survey's history, jumping four points from February to 72%.
The NFIB survey showed that price hikes were most frequent in the wholesale sector, with 84% reporting increases, followed by 83% of construction industry owners, 78% in agriculture, and 77% in retail.
The NFIB noted that energy prices are a major driver of the inflation the U.S. is now experiencing.
Meanwhile, there was a one-point reduction in the percentage of owners who reported job openings that they could not fill, with 47% saying they had open positions in March down from the 46% the prior month. The analysis noted that "the number of unfilled job openings remains far above the 48-year historical average of 23%."
Supply chain issues continue to sting businesses, too, with 40% of owners reporting that supply chain disruptions have had a "significant" impact on their businesses, up three points from the month before. Another 28% reported supply chain problems are having a moderate impact, and 23% reported a mild impact. Only 8% reported seeing no impact.
Overall, the survey showed the percentage of owners expecting better business conditions over the next six months decreased by 14 points to a net -49%, which is the lowest level ever recorded in the survey's 48-year history.
Dunkelberg explained, "With inflation, an ongoing staffing shortage, and supply chain disruptions, small business owners remain pessimistic about their future business conditions."