Small Businesses Slow Down on New Job Creation: NFIB Report
The monthly jobs report from the National Federation of Independent Business (NFIB) showed a slowdown in employment activity for small businesses in March. Despite this, the small business labor market remains tight, with owners competing to retain and recruit employees.
According to the report, a seasonally adjusted net 11% of small business owners are planning to create new jobs in the next three months, which is down one point from February and the lowest level since May 2020. This indicates that small businesses are cautious about hiring new employees due to ongoing uncertainty about the economy.
NFIB Chief Economist Bill Dunkelberg noted that job openings on Main Street are now in line with pre-pandemic levels. However, despite the slowdown in openings, job openings remain low, with 37% of all small business owners reporting job openings they could not fill, which is the lowest reading since January 2021. This suggests that there is still a high demand for skilled workers in certain sectors.
The report also revealed that the percentage of small business owners identifying labor quality as their top operating problem increased by two points from February to 18%. Labor costs, identified as the most important problem for business owners, decreased slightly to 10%, remaining three points below the highest reading of 13% in December 2021. This suggests that small businesses are facing increasing pressure to keep wages competitive while still managing their costs.
In terms of compensation, a net 38% of small business owners reported raising compensation, up three points from February. Looking ahead, a net 21% of small business owners plan to raise compensation in the next three months, an increase of two points from February. This shows that small businesses are investing more in their employees’ salaries and benefits as they try to attract and retain talent.
The NFIB’s report also highlighted that 31% of owners have job openings for skilled workers while 14% have openings for unskilled labor. Job openings were highest in the transportation, construction and services sectors while construction showed a notable decrease from previous month with almost half of small business owners in construction sector reported having a job opening they couldn’t fill while job openings were lowest in finance and wholesale sectors