Operations

Small Business Owners Raising Prices Under Inflationary Pressures

LCT Staff
Posted on December 21, 2005

WASHINGTON, D.C. – Firms raising average selling prices in November soared four points to 26%, the second-highest reading of the National Federation of Independent Business (NFIB) Small Business Economic Trends report since the monthly survey began nearly two decades ago. Small businesses appear to be responding to inflationary pressures in the economy, including the cost of fuel. Spirits among business owners cooled a bit from the exuberant October level, lowering the survey's Optimism Index to 101.2 from an October level that was one of the highest quarterly measures ever taken. NFIB Chief Economist William Dunkelberg said these might not be bad signs after all if they are indications that the economy is slowing from an unsustainable third-quarter pace, a trend that, if it continued, could cause concern at the Federal Reserve.

Although job-creation plans among small business owners were lower, the decline came after three months of near-record readings that more than offset hurricane-associated losses. Fifteen percent of owners said they increased employment in November, while 11% reported workforce reductions. Overall, small businesses added a net 0.15 employees per firm, seasonally adjusted. Workers are getting harder to find: 12% of those surveyed said the availability of qualified workers was their primary business problem.

Source: National Federation of Independent Business

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