The Small Business Index finds business owners more optimistic

WASHINGTON – Based on recently released data US Chamber of Commerce for the third quarter of the year, small business owners believe that the economy is on the rise.

The Q3 MetLife and U.S. Chamber of Commerce Small Business Index hit its highest score since the start of the pandemic as small business owners saw the economy improve. The Index score, which measures the confidence of small business owners, rose from 63.1 to 69.2 this quarter, thanks to a 9% increase (33%) in the share of small businesses saying the economy is healthy.

The report further states that 66% of small businesses said their business was in good shape and 72% said they were comfortable with their cash flow. Both measures rose several notches from last quarter.

“Main Street employers have shown remarkable resilience in the face of high inflation and labor shortages,” says Tom Sullivan, vice president of small business policy at the U.S. Chamber of Commerce. “With the prospect of a recession in the rearview mirror and inflation starting to ease, small business owners are feeling better than they did a year ago.”

Inflation, Employee Retention Is Again a Challenge

More than half (52%) of small business owners say inflation is their biggest problem, still at a record high level over the past year. There was notable concern about wage inflation this quarter, as 56% of workers said it was difficult to meet salary expectations.

Amid ongoing labor shortages, concerns about employee retention and the ability to pay employee benefits have slowly grown. 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).

This quarter’s survey asked small business leaders about the unique advantages and benefits small businesses can offer employees in a competitive job market, the report said.

Nearly 9 in 10 say their company feels like a family and that environment has helped them retain employees (89% vs. 77% in Q3 2021). Similarly, 82% agree that small businesses are uniquely qualified to provide employees with communication and support from senior management.

Most small businesses (70%) say they are now actively considering employee mental health as a priority, up from 60% in Q3 2021. A majority (68%) report using at least one resource to support employee mental health, including employee incentives. providing mental health breaks during work (32%) or offering partial or full reimbursement for childcare (32%).

As small business operators begin to feel more optimistic about the economy and their day-to-day operations, this quarter’s data shows a strong focus on improving over the long term by hiring and retaining the right talent.

“Employee care is a critical element to both an engaged workforce and small business success,” says Cynthia Smith, senior vice president of regional business at MetLife. “It is encouraging to see that the majority of small business owners are focusing on the mental health of their employees and using the resources available. In doing so, they create an environment that attracts and retains a loyal, more productive workforce.”

About the Small Business Index

The MetLife and US Chamber of Commerce Small Business Index is part of a multi-year partnership between MetLife and the US Chamber of Commerce to raise the voice of America’s small business owners and highlight the important role they play in the nation’s economy. The quarterly Index, an online survey of nearly 750 small business owners and decision makers, is designed to take the temperature of the sector, to see where small business owners feel confident and where they are facing challenges.

The Q3 2023 survey was conducted between July 20 and August 8, 2023.

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