The numbers: Small-business owners were a bit more optimistic about the economy in August, but record shortages of labor and supplies are cutting into sales and profits, and hindering the recovery from the pandemic.
A closely followed small-business optimism index rose 0.4 points in August to 100.1, according to the National Federation of Independent Business.
The index recovered slightly from a sharp decline in July, but it’s still below its recent peak of 102.5 in June, owing to lingering problems tied to COVID-19. The surge in delta cases may have also exacerbated the situation.
Big picture: Small and large businesses alike are grappling with persistent shortages of the materials they need to produce goods and services, not to mention the labor needed to do the work.
The lack of supplies stems from major disruptions in global trade tied to the pandemic. Even when the supplies are available, they are stuck at clogged ports and rail stations that are coping with large backlogs.
These supply bottlenecks will eventually ease, but the labor shortage could prove more worrisome. Half of all small-business owners said they could not fill open jobs, the highest level in the 48-year history of the survey.
Millions of people who had jobs before the pandemic still haven’t returned to work. It’s unclear how many will — or when.
“The biggest problems facing small employers right now is finding enough labor to meet their demand, and for many, managing supply chain disruptions,” NFIB chief economist Bill Dunkelberg said.
Key details: More than one-third of small businesses said supply-chain disruptions were a significant problem and 30% reported a “moderate” impact. These disruptions have hurt both sales and profits, the survey found.
A record number of small businesses have increased wages to try to lure workers, but they said finding qualified workers is still their No. 1 problem.
“As the economy moves into the fourth quarter, small-business owners are losing confidence in the strength of future business conditions,” Dunkelberg said.
The NFIB is the nation’s largest small-business lobbying group.