Image Source: Pixabay

In an earlier post, we discussed the latest findings per the NFIB's Small Business Economic Trends report. The report also surveys firms on what they consider to be their most pressing issues. In January, there were some minor shifts in these readings. Overall, cost or quality of labor (combined) accounts for the largest share of small business problems at 31% of firms. That is followed by government-related concerns like taxes or red tape. Again combined, those issues account for just under a quarter of responses.

Inflation also ranks highly among small businesses, but this reading has improved markedly since peaking at 37% in July 2022. Counter to the hot CPI print today, there was a 3 percentage point drop in January in the share of businesses saying inflation is their biggest problem. Of course, that remains at a historically elevated level, matching the 2008 peak.

Stealing from the share of businesses reporting inflation as the biggest problem, poor sales ticked up a percentage point. While not a particularly large or concerning increase (current levels still only rank in the bottom 6% of all months on record), it does bring the reading to the most elevated reading since the summer of 2021.

As we noted in the earlier post, of those businesses saying now is not a good time to expand, the share pointing the finger at interest rates as the main reason has fallen dramatically in the past couple of months. That being said, those saying interest rates are their most important problem hasn't budged.  5% of businesses reported this issue to be their biggest, unchanged versus December at the highest level in over a decade.

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