The recent jobs report by the NFIB offers valuable insights into the current labor market trends and challenges for small business owners. While first-quarter GDP growth dipped below average at 2%, consumer spending emerged as a saving grace, playing a vital role in sustaining the economy.
As navigate the second quarter, spending shows positive signs, resulting in an ongoing demand for workers in several industries.
The report highlights the significant issue of a consistently high number of unfilled job openings. In the most recent survey, 42% of business owners expressed difficulty filling vacancies, representing a slight 2-point decline compared to May.
The rate of unfilled job openings, currently at 42%, surpasses the historical average of 23%. However, a decline of 9 percentage points from the record high of 51% in May 2022 has been observed. The demand for skilled labor remains high, as 35% of business owners report openings in this area.
Furthermore, a pressing demand for unskilled labor has emerged, as a staggering 18% of business owners are actively searching for individuals to fill this particular job category.
Amid a concerning trend, the labor force participation rate remains below its pre-pandemic levels, exacerbating the shortage of workers. However, job openings are gradually trending downward from historically high levels.
Nevertheless, the percentage of small business owners identifying labor quality as their foremost challenge has remained steady at 24%.
Another notable observation is the decrease in the number of small business owners considering labor costs as their primary concern. This figure has dropped by 2 points to 8%, 5 points lower than the peak reading of 13% recorded in December 2021.
In the construction industry, job openings have declined by 5 points compared to the previous month. Despite the impact of higher mortgage rates, the real estate market remains robust, driving a strong demand for workers. However, the Federal Reserve intends to sustain higher rates until inflation subsides.
In a promising yet slightly concerning development for the small business sector, a recent survey has shed light on future job prospects. According to the findings, 15% of small business owners have expressed their intention to create fresh employment opportunities in the next three months. However, this figure marks a slight decline of 4 points compared to the data from May.
Although this indicates a downward trend in hiring plans, they remain historically strong despite the prevailing economic downturn, falling within a normalized range.