Thaddeus Swanek, Strategic Communications, U.S. Chamber of Commerce
The MetLife and U.S. Chamber of Commerce Small Business Index, has hit its highest score since the start of the COVID-19 pandemic in 2020 as more small business owners see an improving economy.
The Q3 2023 Index score jumped this quarter thanks to a nine-percentage point increase in the share of small businesses saying that the U.S. economy is in good health (33%). Small businesses also feel better about their own business health and cash flow: Two in three (66%) report that their business is in good health and roughly seven in ten (72%) say they are comfortable with their cash flow.
On both measures, there has been a nearly-10 point increase from last quarter.
However, small businesses do have a list of concerns and front and center among them is inflation. In fact, this is the seventh consecutive quarter where inflation tops the list of challenges for small business owners.
Over half (52%) of small businesses say inflation is their biggest challenge, a near-record high which has been consistent over the last year. Other concerns don’t come close to registering the same level of concern as inflation. Concerns about supply chain issues, revenue, and rising interest rates continue to stay in a second tier of concerns this quarter—all measuring more than twenty percentage points lower than inflation.
Amid the ongoing worker shortage, small businesses report a slow uptick in concern for employee retention and being able to afford employee benefits. But in the fight for talent—they also believe they have advantages many big corporations lack.
This quarter, small businesses are twice as likely to say employee retention is one of their biggest challenges compared to two years ago (15% vs. 7% in Q3 2021). Small businesses are also having a harder time keeping up with workers’ salary expectations: this quarter a majority (56%) of small businesses said keeping up with employee salary expectations is a challenge.
This quarter’s survey also asked small business leaders about the unique benefits and advantages that small businesses offer employees in a competitive job market. Roughly nine in ten say their company feels like a family and that this environment has helped them retain employees (89% vs. 77% in Q3 2021). Similarly, four in five small businesses (82%) agree that small businesses are uniquely qualified to provide employees with connections to—and support from—upper management.
The Index’s overall score rose slightly to 69.2 this quarter from 63.1 last quarter. This is similar to readings before the COVID-19 pandemic struck in early 2020.
The Q3 2023 SBI survey was conducted between July 20 – August 8, 2023. For more findings from this quarter, and to explore and browse years of small business data, visit: https://www.uschamber.com/sbindex/.