Small business sentiments continued to be negative in November as inflation continued to limit outlooks, according to the National Federation of Independent Business. .The index for small business optimism fell 0.1 points to 90.6, the 23rd straight month it has fallen below the 50-year average of 98. Twenty-two percent of owners cited inflation as their most important problem in operating their business, unchanged from October but 10 points lower than in November 2022. Owners expecting better business conditions over the next six months rose one point from October to a net negative 42 percent. .Monthly inflation numbers have indicated improvement, after inflation reached its decades-high of 9.1 percent in June 2022. November inflation was measured at 3.1 percent as real GDP grew at a nearly 5 percent pace in the third quarter. The increase in average hourly earnings has fallen to an annualized rate of 3.2 percent over the past three months, down from the 4.1 percent 12-month rate..Small business profitability remained limited. The frequency of positive profit trend reports was a net negative 32 percent, which was unchanged from October. Among those seeing lower profits, 36 percent cited weaker sales and 16 percent cited labor costs, with fewer attributing profit drops to lower prices, seasonal changes and financing costs. . A net negative 17 percent of owners reported higher nominal sales in the past three months, unchanged from October and tied for the lowest reading since July 2020. A net 25 percent of owners raised their average selling prices last month, down five points from October. The net percent of owners who expect real sales volumes to grow increased two points to a net negative 8 percent. .The labor market for small business employees remained tight. Forty percent of owners reported job openings that were hard to fill, down three points. The vast majority who were trying to hire employees in November reported few or no qualified applicants. Still, a net 18 percent plan to create new jobs in the next three months. Thirty-six percent of owners reported recently raising their compensation, while 30 percent expect to raise their pay in the next three months, up six points from October and the highest since December 2021. ."Job openings on Main Street remain elevated as the economy saw a strong third quarter," said NFIB Chief Economist Bill Dunkelberg. "However, even with the growing economy, small business owners have not seen a strong wave of workers to fill their open positions. Inflation also continues to be an issue among small businesses.".Other report findings included:.Sixty-one percent made capital outlays in the last six months, up four points from October. Of those, 41 percent invested in new equipment, 23 percent acquired vehicles and 17 percent improved or expanded facilities. Twenty-three percent are planning capital outlays in the next few months. The net percent of owners seeing inventory gains increased three points to a net negative 3 percent. Fourteen percent reported increases in stocks and 16 percent saw reductions.
