![]() The ability to hire and manage workers remains a key concern among business owners, second only to inflation. While the headline confidence measure remains below its historical average, beneath it are signs of underlying resilience. Sentiment among small business owners started 2023 on slightly better footing than it ended last year.The share of firms raising average selling prices fell 1 point to 42%, but those 'planning' to raise prices actually ticked up 5 points to 29%, still making up for only half of the 10-point decline in the month prior. The share of firms increasing compensation rose 2 points to 46%, but the share of those 'planning' to raise compensation fell for the third month in a row, declining by 5 points to 22% – a level that's slightly below the pre-pandemic reading. Concerns regarding labor costs rose 2 points to 10%. ![]() Quality of labor concerns ticked up one point, with 24% of business owners identifying this as their top business problem – second only to inflation (-6 points to 26%). Meanwhile, job openings recorded a notable improvement of 4 points to 45%. The share of businesses planning to increase employment rose 2 points to 19%. Labor market indicators were mostly upbeat.However, the share of firms expecting 'higher real sales' fell 4 points to -14%. Gains in earnings trends (+4 points to -26%) and the share of businesses reporting capital outlays (+4 points to 49%) marked another positive development. Of note, the share of firms expecting better business conditions improved 6 points to -45%. Six of the ten subcomponents improved on the month.The headline index remained below its 49-year historical average of 98 points. The NFIB's Small Business Optimism Index increased by 0.5 points to 90.3 in January, slightly above the market consensus forecast.Small Business Optimism Index Improves Slightly At the Start of 2023
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