WASHINGTON (Reuters) – U.S. small-business confidence improved in January as worries about inflation eased, but labor shortages remained a major concern for many owners, according to a survey on Tuesday.
The National Federation of Independent Business (NFIB) said its Small Business Optimism Index rose 0.5 point to 90.3 last month, also lifted by an improvement in the share of owners who expected better business conditions over the next six months.
Still, it was the 13th consecutive month that the index was below the 49-year average of 98. Owners expecting better business conditions over the next six months rose 6 points to a net -45%, pushing further away from an all-time low of -61% last June.
Twenty-six percent of owners reported that inflation was their single most important problem, down 6 points from December and 11 points below July’s reading, which was the highest since the fourth quarter of 1979.
About 42% of owners reported raising average selling prices, down a point from December. The steady decrease aligns with views that inflation is cooling after surging in the first half of 2022 in part because of stretched supply chains.
While data on Tuesday is expected to show monthly consumer prices accelerating in January, the overall trend in inflation is slowing, with the year-on-year CPI forecast rising 6.2%, according to a Reuters survey of economists.
That would be the smallest annual increase in the CPI since late 2021 and would allow the Federal Reserve to continue with its small pace of interest rate hikes next month. The U.S. central bank has raised its policy rate by 450 basis points since last March from near zero to a 4.50%-4.75% range, with the bulk of the increases between May and December.
Forty-five percent of owners reported job openings that were hard to fill, up 4 points from December and keeping the share at a historically very high level. Construction had the highest percentage of unfilled jobs, followed by transportation and manufacturing.
This fits in with government data this month showing there were 1.9 job openings for every unemployed person in December.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)