25% of small businesses are worried about the same thing

Inflation has been acting like a horrific song of the summer that trails you around incessantly—and now, small businesses are showing the strain.

25% of small business owners said inflation was the “single most important problem” in running their business, according to a new survey from the National Federation of Independent Business (NFIB).

Notably, inflation surpassed labor quality as the top concern for small businesses in the month of May, per the survey. Labor quality came in a close second, though; 24% of small business owners cited it as a top concern.

Small business owners are in a half-empty kind of mood in general. While the NFIB’s “Small Business Optimism Index” rose 0.4 points to 89.4, it still marked the 17th month in a row that it fell “below the 49-year average of 98.” The Optimism Index hasn’t hit or exceeded the average since December 2021.

And, like any diligent pessimist, small business owners don’t feel all that much better when they look ahead to the future, either. The share of small business owners who expected better business conditions in the next six months dropped a point from April to in May “to a net negative 50%” according to the NFIB .

“Overall, small business owners are expressing concerns for future business conditions,” Bill Dunkelberg, NFIB’s chief economist, said in a statement. “Supply chain disruptions and labor shortages will continue to limit the ability of many small firms to meet the demand for their products and services, while less severe than last year’s experience.”

Another key takeaway: 44% of small business owners said job openings were hard to fill; in April, that figure was 45%. In all, 63% of small business owners said they were hiring or trying to hire in May, up from 60% in April. Out of those small businesses, 89% of those owners struggled with a lack of qualified applicants.

“The labor force participation rate remains below pre-COVID levels, which is contributing to the shortage of workers available to fill open positions,” Dunkelberg said in a statement tied to NFIB’s May jobs report.

The small business report was released on the eve of the Federal Reserve’s latest rate hike decision, which marked the first time the Fed held its key rate steady in over a year. While the Fed signaled more hikes are on the horizon, keep an eye on the NFIB’s next survey to see if small businesses start changing their downbeat tune.